1
EXHIBIT 2.10
EXECUTION COPY
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
DATED MAY 16, 1997
AMONG
XXXXX IRON & METAL, INC. AND ITS SHAREHOLDERS
METAL MANAGEMENT, INC.
AND
CIM ACQUISITION, CO.
________________________________________________________________________________
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TABLE OF CONTENTS
PAGE
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Filing and Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Conversion of Merger Sub Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Exchange of Certificates; Payment of Merger Consideration . . . . . . . . . . . . . . . . . . . 3
1.7 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Estate of Xxxxx X. Xxxxx Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIESOF MTLM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 No Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 MTLM Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.15 Good Title to and Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.16 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.19 SEC Filings; Accuracy of Information Furnished by MTLM . . . . . . . . . . . . . . . . . . . . . 10
2.20 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.21 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.22 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.23 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.24 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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2.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.27 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.28 Conduct of Business Since March 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERGECO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 No Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.6 Mergeco Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.7 Business Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OFTHE SHAREHOLDERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . 19
4.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5 Shareholders of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.10 Changes Since the Current Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.11 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.14 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.15 Good Title to and Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.17 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.19 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.21 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.22 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.23 Adequacy of the Assets; Relationships with Customers and Suppliers;
Affiliated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.24 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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4.25 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.26 Customer Lists and Recurring Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.27 Accuracy of Information Furnished by the Shareholders . . . . . . . . . . . . . . . . . . . . . 37
4.28 Investment Intent; Accredited Investor Status; Securities Documents . . . . . . . . . . . . . . 37
4.29 Business Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.30 Names; Prior Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.31 No Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.32 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.33 Identification, Acquisition and Disposition of Material Assets. . . . . . . . . . . . . . . . . 38
4.34 Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.35 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.1 Conduct of Business of the Company Pending the Closing . . . . . . . . . . . . . . . . . . . . . 38
5.2 Conduct of Business of MTLM Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Compliance with Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.5 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.6 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.7 Confidentiality; Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.8 No Other Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.9 Restrictive Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.10 Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.11 Trading in MTLM's Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.13 HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.14 Corporate Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.15 Certification of Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.16 Purchase of Joint Venture Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.17 Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.18 Pre-Clear Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.19 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.20 Conduct of MTLM's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.21 Disclosure Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF MTLM AND MERGECO . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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7.1 Accuracy of Representations and Warranties and Compliance with
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.2 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.3 Corporate Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.4 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.6 No Adverse Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.7 MTLM's Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.8 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.9 Other Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.10 Dissenting Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.11 Xxxxx Building Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.12 Estate of Xxxxx X. Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.13 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.14 MetricMetal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.15 East Chicago Indiana Revenue Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . 51
8.1 Accuracy of Representations and Warranties and Compliance with Obligations . . . . . . . . . . . 51
8.2 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.3 No Adverse Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.5 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.7 Other Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.8 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.1 Agreement by the Shareholders to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.2 Agreement by MTLM to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.3 Conditions of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.4 Security for the Shareholders's Indemnification Obligation . . . . . . . . . . . . . . . . . . . 56
9.5 The Xxxxx X. Xxxxx Estate Special Indemnification . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X
SECURITIES LAW MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.1 Disposition of MTLM Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.2 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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ARTICLE XI
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
12.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.4 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.8 Governing Law; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.9 Arm's Length Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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INDEX OF SCHEDULES
Schedule 2.1 Jurisdictions in which Qualified to do Business
Schedule 2.6 Capitalization of the Companies
Schedule 2.7 Violations; Conflicts; etc.
Schedule 2.8 Subsidiaries
Schedule 2.9 Financial Statements
Schedule 2.10 Liabilities
Schedule 2.11 Litigation
Schedule 2.12 Compliance with Laws
Schedule 2.14 Contracts
Schedule 2.15 Title to and Condition of Assets
Schedule 2.16 Labor and Employment Matters
Schedule 2.17 Tax Matters
Schedule 2.18 Receivables
Schedule 2.19 SEC Filings
Schedule 2.21 Restrictions
Schedule 2.24 Environmental Matters
Schedule 2.25 Employee Benefit Plans
Schedule 2.27(a) and (b) Real Estate
Schedule 2.28 Conduct of Business
Schedule 4.1 Jurisdictions in which Qualified to do Business
Schedule 4.4 Capitalization of the Companies
Schedule 4.5 Shareholders
Schedule 4.6 Violations; Conflicts; etc.
Schedule 4.8 Subsidiaries
Schedule 4.9 Financial Statements
Schedule 4.10 Changes since the Current Balance Sheet Date
Schedule 4.11 Liabilities
Schedule 4.12 Litigation
Schedule 4.13 Environmental Matters
Schedule 4.14(a) Owned Real Estate
Schedule 4.14(b) Leases
Schedule 4.15 Title to and Condition of Assets
Schedule 4.16 Compliance with Laws
Schedule 4.17 Labor and Employment Matters
Schedule 4.18 Employee Benefit Plans
Schedule 4.19 Tax Matters
Schedule 4.20 Insurance
Schedule 4.21 Receivables
Schedule 4.22 Permits
Schedule 4.23 Relationships with Customers and Suppliers
Schedule 4.25 Contracts
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Schedule 4.30 Names
Schedule 4.31 Commissions
Schedule 4.33(a) Asset Update Schedule
Schedule 4.33(b) Liability Update Schedule
Schedule 4.34 Restrictions
Schedule 5.1 Conduct of Business Pending Closing
Schedule 5.2 Conduct of MTLM Business Pending Closing
Schedule 11.1 List of SEC Filings
INDEX OF EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Stockholders Agreement
Exhibit C Form of Warrant
Exhibit D Form of Registration Rights Agreement
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is entered
into effective as of May 16, 1997, by and among Metal Management, Inc., a
Delaware corporation ("MTLM"); CIM Acquisition, Co., an Illinois
corporation, and a wholly owned subsidiary of MTLM ("MERGECO"); Xxxxx Iron
& Metal, Inc., an Illinois corporation ("XXXXX" or "COMPANY"); Xxxxxx X.
Xxxxx, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx, being the sole shareholders of
the Company (collectively the "SHAREHOLDERS," and individually, a
"SHAREHOLDER"). Certain other capitalized terms used herein are defined
in Article XI or elsewhere throughout this Agreement.
RECITALS
A. The Shareholders own, and until the Closing (as defined
herein) will own, all of the issued and outstanding equity securities of
the Company (the "XXXXX SHARES");
B. MTLM desires to acquire all of the Xxxxx Shares in
exchange for shares of common stock, $.01 par value per share, of MTLM
(the "MTLM SHARES") and a cash payment, upon the terms and subject to the
conditions set forth herein;
C. MTLM and the Company have agreed to accomplish this
transaction through a reverse triangular merger whereby Mergeco will merge
with and into Xxxxx, and Xxxxx will be the surviving corporation (the
"MERGER");
D. Each of the Boards of Directors of MTLM, the Company and
Mergeco have approved this Agreement, the Shareholders of the Company have
approved this Agreement and the Board of Directors of MTLM have directed
that this Agreement be submitted to its shareholders for approval; and
E. It is intended that the Merger qualify as a
reorganization within the meaning of the appropriate subsection of Section
368 of the Internal Revenue Code of 1986, as amended.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto agree as
follows:
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ARTICLE I
THE MERGER
1.1 MERGER. Upon and subject to the terms and conditions set
forth in this Agreement and in accordance with the Illinois Business
Corporation Act of 1983, as amended (the "BCA"), Mergeco shall be merged
with and into Xxxxx. Following the Merger, Xxxxx shall continue to exist
as the surviving corporation (sometimes referred to as the "SURVIVING
CORPORATION") and the separate corporate existence of Mergeco shall cease.
1.2 FILING AND EFFECTIVE TIME. At the Closing, Mergeco and
Xxxxx shall file with the Secretary of State of the State of Illinois the
Articles of Merger, appropriately completed and executed in accordance
with Section 11.25 of the BCA. The Merger shall become effective upon
filing and the issuance of the certificate of merger, in accordance with
Section 11.40 of the BCA (the "EFFECTIVE TIME," and the date thereof
hereinafter referred to as the "EFFECTIVE DATE").
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 11.50 of the BCA. In addition:
(a) The Articles of Incorporation of Xxxxx as in
effect at the Effective Time shall be and constitute the Articles
of Incorporation of the Surviving Corporation until amended or
changed in accordance with applicable law;
(b) The bylaws of Xxxxx as in effect at the
Effective Time shall be and constitute the bylaws of the
Surviving Corporation until amended or changed in accordance with
applicable law; and
(c) The officers and directors of the Surviving
Corporation shall be as follows:
Directors: T. Xxxxxxxx Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxx
Officers: Xxxxx X. Xxxxx - President
1.4 CONVERSION FORMULA. At the Effective Time, each Xxxxx
Share, issued and outstanding at and as of the Effective Time, by virtue
of the Merger and without any further action on the part of the holder
thereof, shall be converted into 105,747 shares of MTLM Shares, and a
right to receive $55,172.41 per share payable upon the shareholder's
surrender of his stock certificate(s), subject to adjustment as provided
for in Section 1.8. None of the equity securities of the Company held in
the Company's treasury at the Effective Time shall be converted into MTLM
Shares and the
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right to receive a cash payment. At the Effective Time of the Merger,
all of such equity securities of the Company shall be canceled.
1.5 CONVERSION OF MERGER SUB SHARES. At and as of the
Effective Time, by virtue of the Merger and without any further action on
the part of MTLM, each share of no par value common stock of Mergeco
issued and outstanding to MTLM immediately prior to the Effective Time
shall by virtue of the Merger be converted into one share of common stock
of the Surviving Corporation.
1.6 EXCHANGE OF CERTIFICATES; PAYMENT OF MERGER
CONSIDERATION. At the closing, the Shareholders shall surrender to MTLM
their stock certificates representing their Xxxxx Shares. Upon receipt of
the stock certificates, MTLM shall cancel such stock certificates and MTLM
shall promptly pay the cash portion of the Merger consideration and issue
a certificate representing the MTLM Shares into which such Xxxxx Shares
previously represented by the surrendered certificate shall have been
converted at the Effective Time; provided, however, MTLM shall withhold
from each Shareholder his pro-rata portion of 1,150,000 MTLM Shares
(collectively, the "ESCROW SHARES") and shall deliver a certificate
representing the Escrow Shares to an escrow agent acceptable to MTLM and
the Shareholders (the "ESCROW AGENT"). The Escrow Agent shall hold the
Escrow Shares in escrow pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the "ESCROW AGREEMENT"). Until so
surrendered, the certificates representing the Xxxxx Shares shall, at and
after the Effective Time, be deemed for all purposes to represent and
evidence only the right to receive the per share consideration set forth
in Section 1.4, for each share represented by such certificates, and no
interest shall be paid or accrued on such amount and the holders of such
Xxxxx stock certificates shall cease to have any rights as common
shareholders of the Company.
1.7 THE CLOSING. The Closing of the Merger (the "CLOSING")
shall take place as promptly as practicable (and in any event within five
business days) after satisfaction or waiver of the conditions set forth in
Articles VII and VIII (the "CLOSING DATE"), at the offices of MTLM's
counsel in Chicago, Illinois, or such other place as the parties may
otherwise agree.
1.8 ESTATE OF XXXXX X. XXXXX ADJUSTMENT. The consideration
set forth in Section 1.4 shall be decreased for any payments made by the
Company between the date hereof and the Closing Date or required to be
made by the Company or MTLM after the Closing Date of (i) "Additional
Consideration" due under that certain Sales Agreement dated June 25, 1996
by and between Xxxxx Xxxxx, as executor of the estate of Xxxxx X. Xxxxx,
and the Company (the "XXXXX X. XXXXX SALES AGREEMENT"), or (ii) any other
amounts payable pursuant to the Xxxxx X. Xxxxx Sales Agreement or any
other documents or instruments executed in connection therewith in excess
of the amount reflected on the Company's Current Balance Sheet. The
parties hereto shall make such appropriate adjustments to the cash and
non- cash portion of the Merger consideration that reasonably reflect the
amount and type of settlement paid to the estate of Xxxxx X. Xxxxx, as
mutually agreed to by the parties hereto.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF MTLM
As a material inducement to the Company and the Shareholders to
enter into this Agreement and to consummate the transactions contemplated
hereby, MTLM makes the following representations and warranties to the
Company and the Shareholders:
2.1 CORPORATE STATUS. MTLM is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. MTLM has the requisite power and authority to own or lease its
property and to carry on its business as now being conducted. MTLM is
legally qualified to transact business as a foreign corporation in all
jurisdictions where the nature of its property and the conduct of its
business requires such qualification and is in good standing in each of
the jurisdictions in which it is so qualified, except where the failure to
so qualify would not have a Material Adverse Effect on MTLM. There is no
pending or threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of MTLM. Each entity listed as a subsidiary
of MTLM on Schedule 2.8 hereto (each a "MTLM SUBSIDIARY" and collectively
the "MTLM SUBSIDIARIES") is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation. Each
MTLM Subsidiary has the requisite power and authority to own or lease its
property and to carry on its business as now being conducted. Each MTLM
Subsidiary is legally qualified to transact business as a foreign
corporation in all jurisdictions where the nature of its property and the
conduct of its business requires such qualification (all of which
jurisdictions are listed on Schedule 2.1) and is in good standing in each
of the jurisdictions in which it is so qualified. There is no pending or
threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of any MTLM Subsidiary. MTLM owns all of the issued and
outstanding capital stock of each MTLM Subsidiary.
2.2 CORPORATE POWER AND AUTHORITY. MTLM has the corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and will have, at the time of Closing, the
corporate power and authority to consummate the transactions contemplated
hereby. MTLM has taken all action necessary by its board of directors to
authorize its execution and delivery of this Agreement and the performance
of its obligations hereunder and will have, at the time of Closing, taken
all actions necessary (including stockholder approval) to authorize the
consummation of the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed
and delivered by MTLM and constitutes a legal, valid and binding
obligation of MTLM, enforceable against MTLM in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in
equity.
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2.4 NO COMMISSIONS. Neither MTLM nor any MTLM Subsidiary has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
2.5 RECORDS. The copies of the respective articles of
incorporation and bylaws of MTLM which were provided to the Shareholders
are true, accurate and complete and reflect all amendments made through
the date of this Agreement. The minute books for MTLM provided to the
Shareholders for review were correct and complete as of the date of such
review, no further entries have been made through the date of this
Agreement, such minute books contain the true signatures of the persons
purporting to have signed them, and such minute books contain an accurate
record of all corporate actions of the shareholders and directors (and any
committees thereof) of MTLM taken by written consent or at a meeting since
incorporation. All material corporate actions taken by MTLM have been
duly authorized or ratified. All accounts, books, ledgers and official
and other records of MTLM have been fully, properly and accurately kept
and completed in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained therein. The stock
ledgers of MTLM, as previously provided to the Shareholders, or as
reflected in Schedule 2.6, contain accurate and complete records of all
issuances, transfers and cancellations of shares of the capital stock of
MTLM.
2.6 CAPITALIZATION. Schedule 2.6 sets forth, with respect to
MTLM, (i) the number of authorized shares of each class of its capital
stock, (ii) the number of issued and outstanding shares of each class of
its capital stock, and (iii) the number of shares of each class of its
capital stock which are held in treasury. All of the issued and
outstanding shares of capital stock of MTLM and each MTLM Subsidiary (i)
have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) were issued in compliance with all applicable state
and federal securities laws, and (iii) were not issued in violation of any
preemptive rights or rights of first refusal. No preemptive rights or
rights of first refusal exist with respect to the shares of capital stock
of MTLM or any MTLM Subsidiary, and no such rights arise by virtue of or
in connection with the transactions contemplated hereby. Except as set
forth on Schedule 2.6, there are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind
that could require MTLM or any MTLM Subsidiary to issue or sell any shares
of its capital stock (or securities convertible into or exchangeable for
shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights
with respect to MTLM or any MTLM Subsidiary. Except as set forth on
Schedule 2.6, there are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the capital stock
of MTLM or any MTLM Subsidiary. Neither MTLM nor any MTLM Subsidiary is
obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
2.7 NO VIOLATION. Except as set forth on Schedule 2.7 and
any applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR ACT"), the execution and delivery of this Agreement
by MTLM, the performance by it of its obligations hereunder and the
consummation of the transactions
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contemplated by this Agreement will not (i) contravene any provision of
the certificate of incorporation or bylaws of MTLM, (ii) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or
enforceable against MTLM; (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or
the giving of notice or both, constitute a default) under, or give rise to
a right to terminate, amend, modify, abandon or accelerate, any Contract
which is applicable to, binding upon or enforceable against MTLM, (iv)
result in or require the creation or imposition of any Lien upon or with
respect to any of the property or assets of MTLM, or (v) require the
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any
other Person, except the SEC or other filings required to be made by MTLM.
2.8 MTLM SUBSIDIARIES. Except as set forth on Schedule 2.8,
MTLM does not own, directly or indirectly, more than fifty percent (50%)
of any outstanding voting securities of or other interests in, or control,
any other corporation, partnership, joint venture or other business
entity. In addition, Schedule 2.8 lists every other business entity in
which MTLM or its MTLM Subsidiaries has any ownership interest. Except as
set forth on Schedule 2.8, MTLM does not have any liabilities or
obligations, whether accrued, absolute, contingent or otherwise, arising
from its interest in the entities set forth on such schedule.
2.9 FINANCIAL STATEMENTS. MTLM has delivered to the
Shareholders (i) the consolidated financial statements of MTLM as of
October 31, 1995 and 1994, including the notes thereto, audited by Price
Waterhouse L.L.P. and (ii) the March 31, 1997 unaudited consolidated
financial statements of MTLM (collectively, the "MTLM FINANCIAL
STATEMENTS"), copies of which are attached as Schedule 2.9 hereto. The
balance sheet dated as of March 31, 1997 included in the MTLM Financial
Statements is referred to herein as the "MTLM CURRENT BALANCE SHEET". The
MTLM Financial Statements fairly present the combined and consolidated
financial position of MTLM and the MTLM Subsidiaries at each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently
applied throughout the periods indicated. The books and records of MTLM
and each MTLM Subsidiary fully and fairly reflect the transactions,
properties, assets and liabilities of MTLM and each MTLM Subsidiary.
Unless noted therein, there are no material special or non-recurring items
of income or expense during the periods covered by the MTLM Financial
Statements, and the balance sheets included in the MTLM Financial
Statements do not reflect any writeup or revaluation increasing the book
value of any assets, except as specifically disclosed in the notes thereto
or otherwise in accordance with GAAP. The MTLM Financial Statements
reflect all adjustments necessary for a fair presentation of the financial
information contained therein.
2.10 LIABILITIES. Except as set forth in the SEC Filings or
on Schedule 2.10, neither MTLM nor any MTLM Subsidiary has any liabilities
or obligations, whether accrued, absolute, contingent or otherwise, except
(i) to the extent reflected or taken into account in the MTLM Current
Balance Sheet (and the notes thereto) and not heretofore paid or
discharged, (ii) to the extent specifically set forth in or incorporated
by express reference in any of the Schedules attached hereto,
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(iii) liabilities incurred in the ordinary course of business consistent
with past practice since the date of the MTLM Current Balance Sheet (none
of which relates to breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any action, suit,
claim, governmental investigation or arbitration proceeding), (iv) normal
accruals, reclassifications, and audit adjustments which would be
reflected on an audited financial statement and which would not be
material in the aggregate, and (v) liabilities incurred in the ordinary
course of business prior to the date of the MTLM Current Balance Sheet
which, in accordance with GAAP consistently applied, were not recorded
thereon. For purposes of this Agreement, the phrase "IN THE ORDINARY
COURSE OF BUSINESS" (or words having similar meaning) used in reference to
MTLM's business, shall be deemed to include all of MTLM's activities
relating to acquiring businesses in the scrap metal industry, and all
related financing or borrowing activities, including issuing additional
MTLM Shares, notes, debentures or other securities.
2.11 LITIGATION. Except as set forth on Schedule 2.11, there
is no action, suit, or other legal or administrative proceeding or
governmental investigation, pending or, to the best of MTLM's knowledge,
threatened, anticipated or contemplated against, by or affecting MTLM or
any MTLM Subsidiary or any of their properties or assets, or which
question the validity or enforceability of this Agreement or the
transactions contemplated hereby, and there is no basis for any of the
foregoing. There are no outstanding orders, decrees or stipulations
issued by any Governmental Authority in any proceeding to which MTLM or
any MTLM Subsidiary is or was a party which have not been complied with in
full or which continue to impose any material obligations on MTLM or any
MTLM Subsidiary.
2.12 COMPLIANCE WITH LAWS.
(a) Except as set forth in the SEC Filings, MTLM and
each MTLM Subsidiary is in material compliance with all laws, regulations
and orders applicable to it, its respective business and operations (as
currently conducted) and its properties and assets (in each case currently
owned or used by it). Except as set forth in the SEC Filings or on
Schedule 2.12, neither MTLM nor any MTLM Subsidiary has been cited, fined
or otherwise notified of any present material failure to comply with any
material laws, regulations or orders and no proceeding with respect to any
such material violation is pending or, to the best of MTLM's knowledge,
threatened.
(b) Neither MTLM nor any MTLM Subsidiary has made
any payment of funds in connection with its business which is prohibited
by law, and no funds have been set aside to be used in connection with its
business for any payment prohibited by law.
(c) MTLM and each MTLM Subsidiary is in material
compliance with the terms and provisions of the Immigration Reform and
Control Act of 1986, as amended (the "IMMIGRATION ACT"). With respect to
each Employee (as defined in 8 C.F.R. 274a.1(f)) of MTLM for whom
compliance with the Immigration Act as employer is required, to the best
of MTLM's knowledge, MTLM and each MTLM Subsidiary has on file a true,
accurate and complete copy of (i) each Employee's Form I-9 (Employment
Eligibility Verification Form) and (ii) all other records,documents
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or other papers prepared, procured and/or retained by MTLM and each MTLM
Subsidiary pursuant to the Immigration Act. Neither MTLM nor any MTLM
Subsidiary has been cited, fined, served with a Notice of Intent to Fine
or with a Cease and Desist Order, nor has any action or administrative
proceeding been initiated or threatened against it, by the Immigration and
Naturalization Service by reason of any actual or alleged failure to
comply with the Immigration Act.
(d) Except as fully described in the SEC Filings or
on Schedule 2.12, neither MTLM nor any MTLM Subsidiary is subject to any
Contract, decree or injunction which restricts the continued operation of
any business or the expansion thereof to other geographical areas,
customers and suppliers or lines of business.
2.13 PERMITS. MTLM and each MTLM Subsidiary possess all
material licenses and required governmental or official approvals, permits
or authorizations (collectively, the "PERMITS") for its business and
operations, including the operation of its properties (whether owned or
leased). All such Permits are valid and in full force and effect, MTLM
and each MTLM Subsidiary is in material compliance with the requirements
thereof, and no proceeding is pending or threatened to revoke or amend any
of them. None of such Permits is or will be impaired or in any way
affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2.14 CONTRACTS. The SEC Filings set forth a list of each
Contract which is required to be disclosed pursuant to Item 601(b)(10) of
Regulation S-K (the "DISCLOSED CONTRACTS"), true and correct copies of
which have been provided to the Company. Except as set forth in the SEC
Filings or on Schedule 2.14 no event has occurred which constitutes, or
after notice or the passage of time, or both, would constitute, a material
default by MTLM or any MTLM Subsidiary under any Disclosed Contract, and
no such event has occurred which constitutes or would constitute a
material default by any other party. Neither MTLM nor any MTLM Subsidiary
is subject to any material liability or payment resulting from
renegotiation of amounts paid it under any Disclosed Contract.
2.15 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Except as set forth on Schedule 2.15, MTLM and
each MTLM Subsidiary has good and marketable title to all of its
respective MTLM Assets (as hereinafter defined), free and clear of any
Liens or restrictions on use. For purposes of this Agreement, the term
"MTLM ASSETS" means all of the properties and assets of MTLM and its MTLM
Subsidiaries, other than owned real property and leased real property,
whether personal or mixed, tangible or intangible, wherever located.
(b) To the best of MTLM's knowledge, the MTLM Fixed
Assets (as hereinafter defined) currently in use or necessary for the
business and operations of MTLM and its MTLM Subsidiaries are in good
operating condition, normal wear and tear excepted, and have been
maintained in accordance with sound industry practices. For purposes of
this Agreement, the term "MTLM FIXED ASSETS" means all vehicles,
machinery, equipment, tools, supplies, leasehold
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improvements, furniture and fixtures used by or located on the premises of
MTLM or any MTLM Subsidiary or set forth on the MTLM Current Balance Sheet
or acquired by MTLM or any MTLM Subsidiary since the date of the MTLM
Current Balance Sheet.
2.16 LABOR AND EMPLOYMENT MATTERS. Except as set forth on
Schedule 2.16, neither MTLM nor any MTLM Subsidiary is a party to or bound
by any collective bargaining agreement or any other agreement with a labor
union, and there have been no efforts by any labor union during the 24
months prior to the date hereof to organize any employees of MTLM or any
MTLM Subsidiary into one or more collective bargaining units. There is no
pending, or to the best of MTLM's knowledge, threatened labor dispute,
strike or work stoppage which affects or which may affect the business of
MTLM or any MTLM Subsidiary which may interfere with its continued
operations. Neither MTLM nor any MTLM Subsidiary has within the last 24
months committed any unfair labor practice as defined in the National
Labor Relations Act, as amended, and there is no pending or, to the best
of MTLM's knowledge, threatened charge or complaint against MTLM or any
MTLM Subsidiary by or with the National Labor Relations Board or any
representative thereof. There has been no strike, walkout or work
stoppage involving any of the employees of MTLM or any MTLM Subsidiary
during the 24 months prior to the date hereof. MTLM is not aware that any
executive or key employee or group of employees has any plans to terminate
his, her or their employment with MTLM or any MTLM Subsidiary as a result
of this Agreement or otherwise; provided, that there may be transitioning
of responsibilities as a result of Xxxxxx X. Xxxxx assuming the position
of Chief Operating Officer of MTLM. MTLM and each MTLM Subsidiary has
complied in all material respects with applicable laws, rules and
regulations relating to employment, civil rights and equal employment
opportunities, including but not limited to, the Civil Rights Act of 1964,
the Fair Labor Standards Act and the Worker Adjustment and Retraining
Notification Act of 1988.
2.17 TAX MATTERS. Except as set forth in Schedule 2.17
hereto, all Tax Returns required to be filed prior to the date hereof with
respect to MTLM, the MTLM Subsidiaries or any of their income, properties,
franchises or operations have been filed, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all
such Tax Returns are true, complete and accurate in all material respects.
All Taxes due and payable by or with respect to MTLM and the MTLM
Subsidiaries have been paid or accrued on the MTLM Current Balance Sheet
or will be accrued on its books and records as of the Closing. Except as
set forth in Schedule 2.17 hereto: (i) with respect to each taxable
period of MTLM and each MTLM Subsidiary after January 1, 1992, no taxable
period has been audited by the relevant taxing authority; (ii) no
deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Taxes has been asserted or assessed by any
taxing authority; (iii) neither MTLM nor any MTLM Subsidiary has consented
to extend the time in which any Taxes may be assessed or collected by any
taxing authority; (iv) neither MTLM nor any MTLM Subsidiary has requested
or been granted an extension of the time for filing any Tax Return to a
date later than the Closing Date; (v) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress,
pending or threatened against or with respect to MTLM or any MTLM
Subsidiary regarding Taxes; (vi) neither MTLM nor any MTLM Subsidiary has
made an election or filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "CODE") (or any corresponding
provision of state, local or
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foreign law) on or prior to the Closing Date; (vii) there are no Liens for
Taxes (other than for current Taxes not yet due and payable) upon the
assets of MTLM or any MTLM Subsidiary; (viii) neither MTLM nor any MTLM
Subsidiary will be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment under Section 481(c) of the Code (or any
corresponding provision of state, local or foreign law) in taxable income
for any taxable period (or portion thereof) beginning after the Closing
Date or (B) as a result of any "CLOSING AGREEMENT," as described in
Section 7121 of the Code (or any corresponding provision of state, local
or foreign law), to include any item of income or exclude any item of
deduction from any taxable period (or portion thereof) beginning after the
Closing Date; (ix) neither MTLM nor any MTLM Subsidiary is a party to or
bound by any tax allocation or tax sharing agreement or has any current or
potential contractual obligation to indemnify any other Person with
respect to Taxes; (x) there is no basis for any assessment, deficiency
notice, 30-day letter or similar notice with respect to any Tax to be
issued to MTLM or any MTLM Subsidiary with respect to any period on or
before the Closing Date; (xi) neither MTLM nor any MTLM Subsidiary has
made any payments, and is or will not become obligated (under any contract
entered into on or before the Closing Date) to make any payments, that
will be non-deductible under Section 280G of the Code (or any
corresponding provision of state, local or foreign law); (xii) neither
MTLM nor any MTLM Subsidiary has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
(or any corresponding provision of state, local or foreign law) during the
applicable period specified in Section 897(c)(1)(a)(ii) of the Code (or
any corresponding provision of state, local or foreign law); (xiii) no
claim has ever been made by a taxing authority in a jurisdiction where
MTLM or a MTLM Subsidiary, as the case may be, does not file Tax Returns
that is or may be subject to Taxes assessed by such jurisdiction; (xiv)
MTLM and the MTLM Subsidiaries do not have any permanent establishment in
any foreign country, as defined in the relevant tax treaty between the
United States of America and such foreign country; (xv) true, correct and
complete copies of all income and sales Tax Returns filed by or with
respect to MTLM and the MTLM Subsidiaries for the past two years have been
furnished or made available to the Shareholders; and (xvi) MTLM and the
MTLM Subsidiaries will not be subject to any Taxes pursuant to Section
1374 or Section 1375 of the Code (or any corresponding provision of state,
local or foreign law) for the period ending at the Closing Date for any
period for which a Tax Return has not been filed.
2.18 RECEIVABLES. All of the MTLM Receivables (as hereinafter
defined) are valid and legally binding, represent bona fide transactions
and arose in the ordinary course of business of MTLM and the MTLM
Subsidiaries. Except as set forth on Schedule 2.18, all of the MTLM
Receivables are good and collectible receivables, and will be collected in
full in accordance with the terms of such receivables (and in any event
within six months following the Closing), without set off or
counterclaims, subject to the allowance for doubtful accounts, if any, set
forth on the MTLM Current Balance Sheet as reasonably adjusted since the
date of the MTLM Current Balance Sheet in the ordinary course of business
consistent with past practice. For purposes of this Agreement, the term
"MTLM RECEIVABLES" means all receivables of MTLM and the MTLM
Subsidiaries, including all trade account receivables arising from the
provision of services or sale of inventory but excluding notes receivable,
and insurance proceeds receivable.
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2.19 SEC FILINGS; ACCURACY OF INFORMATION FURNISHED BY MTLM.
Except as set forth on Schedule 2.19, MTLM has made all filings required
to be made by it with the SEC. No representation, statement or
information made or furnished by MTLM to the Shareholders or any of the
Shareholders' representatives, including those contained in this
Agreement, and the various Schedules attached hereto and the other
information and statements referred to herein and previously furnished by
MTLM and the MTLM Subsidiaries or made in the SEC Filings, contains or
shall contain any untrue statement of a material fact or omits or shall
omit any material fact necessary to make the information contained therein
not misleading in light of the circumstances in which they were made.
MTLM has provided the Shareholders with true, accurate and complete copies
of all documents listed or described in the SEC Filings or on the various
Schedules attached hereto.
2.20 INVENTORY. All MTLM Assets that consist of inventory
(including raw materials and work-in-progress): (i) were acquired in the
ordinary course of business consistent with past practice; (ii) are, in
the aggregate, of a quality, quantity, and condition useable or saleable
in the ordinary course of business within MTLM and the MTLM Subsidiaries'
normal inventory turnover experience; and (iii) are valued at the lower of
cost or net realizable market value. Neither MTLM nor any MTLM Subsidiary
has any material liability with respect to the return or repurchase of any
goods in the possession of any customer.
2.21 RESTRICTIONS. Schedule 2.21 sets forth a list of all
non-competition, non-solicitation, confidentiality and other restrictive
covenants to which MTLM and/or any MTLM Subsidiary is a party or otherwise
bound. Except as set forth on Schedule 2.21, there are no contracts or
other conditions, circumstances, events or agreements which would in any
way limit or restrict the rights of MTLM, MTLM's Affiliates, or the MTLM
Subsidiaries from engaging in any business anywhere in the world.
2.22 FULL DISCLOSURE. No statement by MTLM contained in this
Article II, the SEC Filings and the Schedules hereto or any written
statement or certificate furnished to the Shareholders as of its
respective date contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
contained herein or therein not materially and adversely misleading in
light of the circumstances under which they were made.
2.23 NO MATERIAL ADVERSE CHANGE. Since March 31, 1997, there
has been no Material Adverse Change in the assets, liabilities, business
or financial condition of MTLM or a Material Adverse Effect on the ability
of MTLM to consummate the transactions contemplated hereby. For purposes
of this Section 2.23 and Section 8.8, a "MATERIAL ADVERSE CHANGE" or a
"MATERIAL ADVERSE EFFECT" shall not include (i) the acquisition of or
agreement to acquire any companies or the assets of any companies; (ii)
the termination of any agreement to acquire or the unwind or sale of any
companies or the assets of any companies; (iii) the employment of any
executive officers; (iv) the placement of, or entering into or termination
of any agreement to place, any debt or equity securities of MTLM; (v) any
change in the trading price of the MTLM Shares; or (vi) any change in the
Board of Directors of MTLM.
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2.24 ENVIRONMENTAL MATTERS. Except as set forth on Schedule
2.24:
(a) To the best of MTLM's knowledge, MTLM and each
MTLM Subsidiary is in material compliance with all Environmental, Health
and Safety Laws (as defined herein) governing its business, operations,
properties and assets. Neither MTLM nor any MTLM Subsidiary is currently
liable for any penalties, fines or forfeitures for failure to comply with
any Environmental, Health and Safety Laws.
(b) MTLM and each MTLM Subsidiary has obtained, or
caused to be obtained, and to the best of the MTLM's knowledge, is in
material compliance with, all applicable and material licenses,
certificates, permits, approvals and registrations required by the
Environmental, Health and Safety Laws (collectively "LICENSES"). Copies
of such Licenses have been made available to the Shareholders. There are
no administrative or judicial investigations, notices, claims or other
proceedings pending or threatened by any Governmental Authority or third
parties against MTLM or any MTLM Subsidiary, their respective businesses,
operations, properties, or assets, which question the validity or
entitlement of MTLM or any MTLM Subsidiary to any License wherein an
unfavorable decision, ruling or finding could have a Material Adverse
Effect on MTLM or any MTLM Subsidiary.
(c) Neither MTLM nor any MTLM Subsidiary has
received or is aware of any non-compliance order, warning letter,
investigation, notice of violation, claim, suit, action, judgment, or
administrative or judicial proceeding pending or threatened against or
involving MTLM or any MTLM Subsidiary, issued by any Governmental
Authority or third party with respect to any Environmental, Health and
Safety Laws, which has not been resolved to the satisfaction of the
issuing Governmental Authority or third party and which could have a
Material Adverse Effect on MTLM or any MTLM Subsidiary.
(d) To the best of the MTLM's knowledge, neither
MTLM nor any MTLM Subsidiary has generated, manufactured, used,
transported, transferred, stored, handled, treated, Discharged, Released
or disposed of, nor has it allowed or arranged for any third parties to
generate, manufacture, use, transport, transfer, store, handle, treat,
Discharge, Release or dispose of, Hazardous Substances or other Waste (as
defined herein) to or at any location other than a site lawfully permitted
to receive such Hazardous Substances or other waste for such purposes, nor
has it performed, arranged for or allowed by any method or procedure such
generation, manufacture, use, transportation, transfer, storage,
treatment, spillage, leakage, dumping, Discharge, Release or disposal in
material contravention of any Environmental, Health and Safety Laws. To
the best of the MTLM's knowledge, neither MTLM nor any MTLM Subsidiary has
generated, manufactured, used, stored, handled, treated, Discharged,
Released or disposed of, or allowed or arranged for any third parties to
generate, manufacture, use, store, handle, treat, spill, leak, dump,
discharge, release or dispose of, any material quantities of Hazardous
Substances or other waste upon property currently or previously owned or
leased by it, except as permitted by law. For purposes of this Agreement,
the term "HAZARDOUS SUBSTANCES" means any toxic or hazardous substance,
material, or waste, and any other contaminant, pollutant or constituent
thereof, whether liquid, solid, semi-solid, sludge and/or gaseous,
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including without limitation, chemicals, compounds, metals, by-products,
pesticides, asbestos containing materials, petroleum or petroleum
products, and polychlorinated biphenyls, the presence of which requires
investigation or remediation under any Environmental, Health and Safety
Laws or which are or become regulated, listed or controlled by, under or
pursuant to any Environmental Health and Safety Laws. For purposes of
this Agreement, the term "WASTE" means agricultural wastes, biomedical
wastes, biological wastes, bulky wastes, construction and demolition
debris, garbage, household wastes, industrial solid wastes, liquid wastes,
recyclable materials, sludge, solid wastes, special wastes, used oils,
white goods, and yard trash.
(e) To the best of MTLM's knowledge, neither MTLM
nor any MTLM Subsidiary has caused, nor allowed to be caused or permitted,
either by action or inaction, a Release or Discharge, or threatened
Release or Discharge, of any material quantity of Hazardous Substance on,
into or beneath the surface of any parcel of the MTLM Owned Properties or
the MTLM Leased Premises or to any properties adjacent thereto which would
have a Material Adverse Effect on MTLM or the MTLM Subsidiaries. To the
best of MTLM's knowledge, there has not occurred, nor is there presently
occurring, a Release or Discharge, or, threatened Release or Discharge, of
any material quantity of Hazardous Substances on, into or beneath the
surface of any parcel of the MTLM Owned Properties or the MTLM Leased
Premises or to any properties adjacent thereto which would have a Material
Adverse Effect on MTLM or the MTLM Subsidiaries. For purposes of this
Agreement, the terms "RELEASE" and "DISCHARGE" shall have the meanings
given them in the Environmental, Health and Safety Laws.
(f) To the best of MTLM's knowledge, neither MTLM
nor any MTLM Subsidiary has generated, handled, manufactured, treated,
stored, used, shipped, transported, transferred, or disposed of, nor has
it allowed or arranged, by contract, agreement or otherwise, for any third
parties to generate, handle, manufacture, treat, store, use, ship,
transport, transfer or dispose of, any Hazardous Substances or other Waste
to or at a site which, pursuant to CERCLA or any similar state law has
been placed or been proposed for placement on the National Priorities List
or its state equivalent. Neither MTLM nor any MTLM Subsidiary has
received notice, and neither MTLM nor any MTLM Subsidiary has knowledge of
any facts which could give rise to any notice, that MTLM or any MTLM
Subsidiary is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under Environmental
Health and Safety Laws. Neither MTLM nor any MTLM Subsidiary has
submitted or was required to submit any notice pursuant to Section 103(c)
of CERCLA with respect to the MTLM Leased Premises or the MTLM Owned
Properties. Neither MTLM nor any MTLM Subsidiary has received any written
request for information in connection with any federal or state
environmental cleanup site, or in connection with any of the real property
or premises where MTLM or any MTLM Subsidiary has transported, transferred
or disposed of other Wastes. Neither MTLM nor any MTLM Subsidiary has
been required to or has undertaken any response or remedial actions or
clean-up actions of any kind at the request of any Governmental
Authorities or at the request of any other third party. To the best of
MTLM's knowledge, neither MTLM nor any MTLM Subsidiary has any material
liability under any Environmental, Health and Safety Laws for personal
injury, property damage, natural resource damage, or clean up obligations.
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(g) To the best of MTLM's knowledge, there are no
Aboveground Storage Tanks or Underground Storage Tanks on the MTLM Owned
Properties or the MTLM Leased Premises. For purposes of this Agreement,
the terms "ABOVEGROUND STORAGE TANKS" and "UNDERGROUND STORAGE TANKS"
shall have the meanings given them in Section 6901 et seq., as amended, of
RCRA, or any applicable state or local statute, law, ordinance, code,
rule, regulation, order ruling, or decree governing Aboveground Storage
Tanks or Underground Storage Tanks.
(h) Schedule 2.24 identifies (i) all material
environmental audits, assessments or occupational health studies, of which
MTLM is aware, undertaken by MTLM, the MTLM Subsidiaries or their agents,
or by any Governmental Authority, or by any third party, relating to or
affecting MTLM, the MTLM Subsidiaries or any of the MTLM Leased Premises
or the MTLM Owned Properties; and (ii) all material citations issued under
OSHA, or similar state or local statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, relating to or affecting MTLM or
any MTLM Subsidiary or any of the MTLM Leased Premises or the MTLM Owned
Properties.
(i) Schedule 2.24 contains a list of the assets of
MTLM and the MTLM Subsidiaries which have been confirmed to contain
"ASBESTOS" or "ASBESTOS-CONTAINING MATERIAL" (as such terms are identified
under the Environmental, Health and Safety Laws). MTLM and each of the
MTLM Subsidiaries has operated and continues to operate in material
compliance with all Environmental, Health and Safety Laws governing the
handling, use and exposure to and disposal of asbestos or
asbestos-containing materials. There are no claims, actions, suits,
governmental investigations or proceedings before any Governmental
Authority or third party pending, or threatened against or directly
affecting MTLM, the MTLM Subsidiaries, or any of their respective assets
or operations relating to the use, handling or exposure to and disposal of
asbestos or asbestos-containing materials in connection with their assets
and operations.
(j) As used in this Agreement, "ENVIRONMENTAL,
HEALTH AND SAFETY LAWS" means all federal, state, regional or local
statutes, laws, rules, regulations, codes, orders, plans, injunctions,
decrees, rulings, and changes or ordinances or judicial or administrative
interpretations thereof, any of which govern (or purport to govern) or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste or occupational health and safety, as any of
these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation, the United States Department of
Transportation Table (49 CFR 172, 101) or by the Environmental Protection
Agency as hazardous substances (40 CFR Part 302) and any amendments
thereto; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (hereinafter
collectively "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conversation and Recovery Act of 1976 and subsequent Hazardous
and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq.
(hereinafter, collectively "RCRA"); the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Section 1801, et seq.; the Clean Water Act, as
amended, 33 U.S.C. Section 1311, et seq.; the Clean Air Act, as amended
(42 U.S.C. Section 7401-7642); Toxic Substances
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Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. Section
136-136y ("FIFRA"); the Emergency Planning and Community Right-to-Know Act
of 1986 as amended, 42 U.S.C. Section 11001, et seq. (Title III of XXXX)
("EPCRA"); the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. Section 651, et seq. ("OSHA"); any similar state statute, or
regulations implementing such statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, or which has been or shall be
determined or interpreted at any time by any Governmental Authority to be
a hazardous or toxic substance regulated under any other statute, law,
regulation, order, code, rule, order, or decree.
(k) Schedule 2.24 identifies the operations and
activities, and locations thereof, which have been conducted and are being
conducted by MTLM or any MTLM Subsidiary on any of the MTLM Owned
Properties or the MTLM Leased Premises which have involved the generation,
accumulation, storage, treatment, transportation, labeling, handling,
manufacturing, use, spilling, leaking, dumping, discharging, release or
disposal of any material quantities of Hazardous Substances.
(l) To the best of MTLM's knowledge, none of the
MTLM Owned Properties or MTLM Leased Premises presently includes, or has
been constructed upon, any "WETLANDS" as defined under applicable
Environmental, Health and Safety Laws.
(m) As used in this Section 2.24, the term "MTLM"
is deemed to refer to MTLM or any of the MTLM Subsidiaries.
(n) As used in Section 2.24, the terms "MTLM OWNED
PROPERTIES" and "MTLM LEASED PREMISES" are deemed to refer only to the
properties currently owned or leased by MTLM.
2.25 EMPLOYEE BENEFIT PLANS.
(a) Compliance with Law. With respect to each MTLM
Employee Benefit Plan (as defined below) (i) each has been administered in
all material respects in compliance with its terms and with all applicable
laws, including, but not limited to, the Employee Retirement Income and
Security Act of 1974, as amended ("ERISA") and the Code; (ii) no actions,
suits, claims or disputes are pending or, to the best of MTLM's knowledge,
threatened; (iii) no audits, inquiries, reviews, proceedings, claims, or
demands are pending with any governmental or regulatory agency; (iv) there
are no facts which could give rise to any material liability in the event
of any such investigation, claim, action, suit, audit, review, or other
proceeding; (v) all material reports, returns, and similar documents
required to be filed with any governmental agency or distributed to any
plan participant have been duly or timely filed or distributed; and (vi)
no "PROHIBITED TRANSACTION" which could give rise to any material
liability of MTLM or any MTLM Subsidiary has occurred within the meaning
of the applicable provisions of ERISA or the Code. As used in this
Section 2.25, MTLM Employee Benefit Plan means any employee benefit plan
or arrangement of MTLM and each MTLM Subsidiary, including but not limited
to employee pension benefit plans, as defined in Section 3(2) of ERISA,
multiemployer plans, as defined in Section 3(37) of ERISA, employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans,
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stock purchase plans, hospitalization, disability and other insurance
plans, severance or termination pay plans and policies, whether or not
described in Section 3(3) of ERISA, in which employees, their spouses or
dependents, of MTLM or any MTLM Subsidiary participate.
(b) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA
PLAN") (i) all contributions required to be made with respect to employees
of MTLM or any MTLM Subsidiary have been timely paid; (ii) neither MTLM
nor any MTLM Subsidiary has incurred or is expected to incur, directly or
indirectly, any withdrawal liability under ERISA with respect to any such
plan (whether by reason of the transactions contemplated by the Agreement
or otherwise); (iii) Schedule 2.25 sets forth (A) the withdrawal liability
under ERISA to each MPPA Plan, (B) the date as of which such amount was
calculated, and (C) the method for determining the withdrawal liability;
and (iv) no such plan is (or is expected to be) insolvent or in
reorganization and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists or is expected to exist with respect to any such plan.
(c) Welfare Plans. Other than as disclosed in
Schedule 2.25, (i) neither MTLM nor any MTLM Subsidiary is obligated under
any employee welfare benefit plan as described in Section 3(1) of ERISA
("WELFARE PLAN"), whether or not disclosed in Schedule 2.25, to provide
medical or death benefits with respect to any employee or former employee
of MTLM, any MTLM Subsidiary or their predecessors after termination of
employment, other than as required by Section 4980B of the Code; (ii) MTLM
and each MTLM Subsidiary have complied in all material respects with the
notice and continuation coverage requirements of Section 4980B of the Code
and the regulations thereunder with respect to each Welfare Plan that is,
or was during any taxable year for which the statute of limitations on the
assessment of federal income taxes remains, open, by consent or otherwise,
a group health plan within the meaning of Section 5000(b)(1) of the Code,
and (iii) there are no reserves, assets, surplus or prepaid premiums under
any Welfare Plan which is an Employee Benefit Plan. The consummation of
the transactions contemplated by this Agreement will not entitle any
individual to severance pay, and, will not accelerate the time of payment
or vesting, or increase the amount of compensation, due to any individual.
2.26 INSURANCE. MTLM and each MTLM Subsidiary is covered by
valid, outstanding and enforceable policies of insurance issued to it by
reputable insurers covering its properties, assets and businesses against
risks of the nature normally insured against by businesses in the same or
similar lines of business and in coverage amounts typically and reasonably
carried by such businesses (the "MTLM INSURANCE POLICIES"), provided,
however, MTLM and the MTLM Subsidiaries generally do not insure their
machinery and equipment except as MTLM or the MTLM Subsidiaries may be
required to insure such assets by third party lenders or lessors. Such
MTLM Insurance Policies are in full force and effect, and all premiums due
thereon have been paid. As of the Closing Date each of the MTLM Insurance
Policies will be in full force and effect. None of the MTLM Insurance
Policies will lapse or terminate as a result of the transactions
contemplated by this Agreement. MTLM and each MTLM Subsidiary has complied
with the provisions of such MTLM Insurance Policies. Schedule 2.26
contains (i) a complete and correct list of all MTLM Insurance Policies
and all
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amendments and riders thereto (copies of which have been provided to the
Shareholders) and (ii) a detailed description of each pending claim under
any of the MTLM Insurance Policies for an amount in excess of $50,000 that
relates to loss or damage to the properties, assets or businesses of MTLM
or any MTLM Subsidiary. Neither MTLM nor any MTLM Subsidiary has failed to
give, in a timely manner, any notice required under any of the MTLM
Insurance Policies to preserve its rights thereunder.
2.27 REAL ESTATE. Attached hereto as Schedule 2.27(a) are
true and correct copies of all schedules listing each parcel of real
property owned (the "MTLM OWNED PROPERTIES") or leased (the "MTLM LEASED
PROPERTIES") by MTLM or the MTLM Subsidiaries that were given to MTLM in
connection with MTLM's acquisition of (i) HouTex; (ii) XxxXxxx; (iii)
Reserve; and (iv) EMCO, together with the corresponding representations
and warranties contained in the respective purchase agreements. Other
than (i) the properties listed in such schedules, (ii) MTLM principal
office located at 000 X. Xxxxxxxx Xxxxxx, and (iii) the properties listed
on Schedule 2.27(b), MTLM and the MTLM Subsidiaries do not own or lease
any parcel of property. To the best of MTLM's knowledge, nothing has
occurred since the respective closing dates of the acquisitions of (i)
HouTex (ii) XxxXxxx (iii) Reserve and (iv) EMCO to cause the
representations and warranties contained in the respective purchase
agreements to become inaccurate in any material respects.
2.28 CONDUCT OF BUSINESS SINCE MARCH 31, 1997. Except as set
forth on Schedule 2.28, MTLM between March 31, 1997 and the date of this
Agreement has conducted the businesses of MTLM and each MTLM Subsidiary
only in the ordinary course of business, consistent with past practice.
By way of amplification and not limitation, except as set forth on
Schedule 2.28, the SEC Filings, or as otherwise contemplated by this
Agreement neither MTLM nor any MTLM Subsidiary has directly or indirectly,
done or agreed to do any of the following:
(a) amended or otherwise changed its charter or
bylaws;
(b) issued, sold, pledged, disposed of, granted,
encumbered, or authorized the issuance, sale, pledge, disposition, grant
or encumbrance of (i) with respect to MTLM or any MTLM Subsidiary, any
shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares
of such capital stock, or any other ownership interest, of it, or, (ii)
any of their respective assets, tangible or intangible, except in the
ordinary course of business consistent with past practice;
(c) increased the compensation payable or to become
payable to its respective officers or directors, or, except as presently
bound to do, granted any severance or termination pay to, or entered into
any employment or severance agreement with, any of its respective
directors or officers, or established, adopted, entered into or amended or
took any action to accelerate any rights or benefits under any collective
bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
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(d) taken any action other than in the ordinary
course of business and in a manner consistent with past practice with
respect to accounting policies or procedures; or
(e) (i) acquired (including, without limitation, for
cash or shares of stock, by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other business
organization or division thereof of any assets, or made any investment
either by purchase of stock or securities, contributions of capital or
property transfer, or, except in the ordinary course of business,
consistent with past practice, purchase any property or assets of any
other Person, (ii) incurred any indebtedness for borrowed money or issued
any debt securities or assumed, guaranteed or endorsed or otherwise as an
accommodation became responsible for, the obligations of any Person, or
made any loans or advances, or (iii) entered into any Contract other than
in the ordinary course of business, consistent with past practice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF MERGECO
As a material inducement to the Company and the Shareholders to
enter into this Agreement and to consummate the transactions contemplated
hereby, MTLM and Mergeco jointly and severally make the following
representations and warranties to the Company and the Shareholders:
3.1 CORPORATE STATUS. Mergeco is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Illinois.
3.2 CORPORATE POWER AND AUTHORITY. Mergeco has the corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and will have, at the time of Closing, the
corporate power and authority to consummate the transactions contemplated
hereby. Mergeco has taken all action necessary to authorize its execution
and delivery of this Agreement and the performance of its obligations
hereunder and will have, at the time of Closing, taken all actions
necessary to authorize the consummation of the transactions contemplated
hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed
and delivered by Mergeco and constitutes a legal, valid and binding
obligation of Mergeco, enforceable against Mergeco in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
3.4 NO VIOLATION. Except for any applicable requirements of
the HSR Act, the execution and delivery of this Agreement by Mergeco, the
performance by it of its obligations hereunder and
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the consummation by it of the transactions contemplated by this Agreement
will not (i) contravene any provision of the articles of incorporation or
bylaws of Mergeco, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order
of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against Mergeco, (iii) conflict
with, result in any breach of, or constitute a default (or an event which
would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to,
binding upon or enforceable against Mergeco, (iv) result in or require
the creation or imposition of any Lien upon or with respect to any of the
property or assets of Mergeco, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except
the Secretary of State of the State of Illinois, or the SEC or other
filings required to be made by MTLM.
3.5 NO COMMISSIONS. Mergeco has incurred no obligation for
any finder's or broker's or agent's fees or commissions or similar
compensation in connection with the transactions contemplated hereby.
3.6 MERGECO CAPITALIZATION. Mergeco's authorized capital
stock consists of one thousand (1000) shares of common stock, no par
value, of which one hundred (100) shares are issued and outstanding all of
which are validly issued, fully paid and non-assessable. Except for this
Agreement, there are no options, warrants, preemptive rights, conversion
privileges or other contracts which give any Person the right to acquire
any capital stock of Mergeco or any interest therein. MTLM is the
beneficial and record owner of all of the outstanding shares of common
stock of Mergeco, free and clear of all Liens.
3.7 BUSINESS ACTIVITY. Mergeco has not engaged in any
business activity of any nature prior to the date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS AND THE COMPANY
As a material inducement to MTLM to enter into this Agreement and
to consummate the transactions contemplated hereby, the Shareholders and
the Company hereby jointly and severally make the following
representations and warranties to MTLM:
4.1 CORPORATE STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Illinois. The Company has the requisite power and authority to
own or lease its property and to carry on its business as now being
conducted. The Company is legally qualified to transact business as a
foreign corporation in all jurisdictions where the nature of its property
and the conduct of its business requires such qualification (all of which
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jurisdictions are listed on Schedule 4.1) and is in good standing in each
of the jurisdictions in which it is so qualified, except where the failure
to so qualify would not have a Material Adverse Effect on the Company.
There is no pending or threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of the Company. Each entity
listed as a subsidiary of the Company on Schedule 4.8 hereto (each a
"SUBSIDIARY" and collectively the "SUBSIDIARIES") is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation. Each Subsidiary has the requisite power and
authority to own or lease its property and to carry on its business as now
being conducted. Each Subsidiary is legally qualified to transact
business as a foreign corporation in all jurisdictions where the nature of
its property and the conduct of its business requires such qualification
(all of which jurisdictions are listed on Schedule 4.1) and is in good
standing in each of the jurisdictions in which it is so qualified. There
is no pending or threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of any Subsidiary. Except as set forth on
Schedule 4.8, the Company owns all of the issued and outstanding capital
stock of each Subsidiary.
4.2 POWER AND AUTHORITY. The Company has the power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The Company has taken all action necessary to authorize the
execution and delivery of this Agreement, the performance of its
respective obligations hereunder and the consummation of the transactions
contemplated hereby. Each of the Shareholders is a resident of the State
of Illinois and has the requisite competence to execute and deliver this
Agreement and to perform his obligations hereunder and to consummate the
transactions contemplated hereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed
and delivered by the Company and each of the Shareholders and constitutes
the legal, valid and binding obligation of each of them, enforceable
against them in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally
and general equitable principles regardless of whether such enforceability
is considered in a proceeding at law or in equity.
4.4 CAPITALIZATION. Schedule 4.4 sets forth, with respect to
the Company and each Subsidiary, (i) the number of authorized shares of
each class of its capital stock, (ii) the number of issued and outstanding
shares of each class of its capital stock, and (iii) the number of shares
of each class of its capital stock which are held in treasury. All of the
issued and outstanding shares of capital stock of the Company and each
Subsidiary (i) have been duly authorized and validly issued and are fully
paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, and (iii) were not issued in
violation of any preemptive rights or rights of first refusal. No
preemptive rights or rights of first refusal exist with respect to the
shares of capital stock of the Company or any Subsidiary, and no such
rights arise by virtue of or in connection with the transactions
contemplated hereby. There are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind
that could require the Company or any Subsidiary to issue or sell any
shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock).
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Except as set forth on Schedule 4.4, there are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights
with respect to the Company or any Subsidiary. Other than pursuant to the
Xxxxx X. Xxxxx Sales Agreement, there are no proxies, voting rights or
other agreements or understandings with respect to the voting or transfer
of the capital stock of the Company or any Subsidiary. Neither the
Company nor any Subsidiary is obligated to redeem or otherwise acquire any
of its outstanding shares of capital stock.
4.5 SHAREHOLDERS OF THE COMPANY. Schedule 4.5 sets forth,
with respect to the Company, (i) the name, address and federal taxpayer
identification number of, and the number of outstanding shares of each
class of its capital stock owned by, each shareholder of record as of the
close of business on the date of this Agreement; and (ii) the name,
address and federal taxpayer identification number of, and number of
shares of each class of its capital stock beneficially owned by, each
beneficial owner of outstanding shares of capital stock (to the extent
that record and beneficial ownership of any such shares are different).
The Shareholders are the holders of all issued and outstanding shares of
capital stock of the Company, and the Shareholders own such shares as set
forth on Schedule 4.5, free and clear of all Liens, restrictions and
claims of any kind, except as set forth on Schedule 4.5. Such shares are
not subject to any voting trust agreement, proxy or other Contract.
4.6 NO VIOLATION. Except as set forth on Schedule 4.6 and
any applicable requirements of the HSR Act, the execution and delivery of
this Agreement by the Company and the Shareholders, the performance by
each of them of their respective obligations hereunder and the
consummation by them of the transactions contemplated by this Agreement
will not (i) contravene any provision of the articles of incorporation or
bylaws of the Company, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order
of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against the Company or the
Shareholders; (iii) conflict with, result in any breach of, or constitute
a default (or an event which would, with the passage of time or the giving
of notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Company or the
Shareholders, (iv) result in or require the creation or imposition of any
Lien upon or with respect to any of the property or assets of the Company,
or (v) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except the Secretary of State of the State
of Illinois.
4.7 RECORDS. The copies of the respective articles of
incorporation and bylaws of the Company which were provided to MTLM are
true, accurate and complete and reflect all amendments made through the
date of this Agreement. The minute books for the Company provided to MTLM
for review were correct and complete as of the date of such review, no
further entries have been made through the date of this Agreement, such
minute books contain the true signatures of the persons purporting to have
signed them, and such minute books contain an accurate record of all
corporate actions of the shareholders and directors (and any committees
thereof) of the Company taken by written consent or at a meeting since
incorporation. All material corporate actions taken by the
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Company have been duly authorized or ratified. All accounts, books,
ledgers and official and other records of the Company have been fully,
properly and accurately kept and completed in all material respects, and
there are no material inaccuracies or discrepancies of any kind contained
therein. The stock ledgers of the Company, as previously provided to
MTLM, contain accurate and complete records of all issuances, transfers
and cancellations of shares of the capital stock of the Company.
4.8 SUBSIDIARIES. Except as set forth on Schedule 4.8, the
Company does not own, directly or indirectly, more than fifty percent
(50%) of any outstanding voting securities of or other interests in, or
control, any other corporation, partnership, joint venture or other
business entity. In addition, Schedule 4.8 lists every other business
entity in which the Company or its Subsidiaries has any ownership
interest. Except as set forth on Schedule 4.8, the Company does not have
any liabilities or obligations, whether accrued, absolute, contingent or
otherwise, arising from its interest in the entities set forth on such
schedule.
4.9 FINANCIAL STATEMENTS. The Shareholders have delivered to
MTLM (i) the consolidated financial statements of the Company as of
December 31, 1996 and 1995, including the notes thereto, audited by
Deloitte & Touche LLP and (ii) the March 31, 1997 unaudited consolidated
financial statements of the Company (collectively, the "FINANCIAL
STATEMENTS"), copies of which are attached as Schedule 4.9 hereto. The
balance sheet dated as of March 31, 1997 included in the Financial
Statements is referred to herein as the "CURRENT BALANCE SHEET". The
Financial Statements fairly present the combined and consolidated
financial position of the Company and the Subsidiaries at each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently
applied throughout the periods indicated; provided, however, the parties
hereto acknowledge that the March 31, 1997 consolidated financial
statements omit footnotes. The books and records of the Company and each
Subsidiary fully and fairly reflect the transactions, properties, assets
and liabilities of the Company and each Subsidiary. Unless noted therein,
there are no material special or non-recurring items of income or expense
during the periods covered by the Financial Statements, and the balance
sheets included in the Financial Statements do not reflect any writeup or
revaluation increasing the book value of any assets, except as
specifically disclosed in the notes thereto or otherwise in accordance
with GAAP. The Financial Statements reflect all adjustments necessary for
a fair presentation of the financial information contained therein.
4.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
disclosed in Schedule 4.10, since the date of the Current Balance Sheet,
neither the Company nor any Subsidiary has (i) issued any capital stock or
other securities; (ii) made any distribution of or with respect to its
capital stock or other securities or purchased or redeemed any of its
securities; (iii) paid any bonus to or increased the rate of compensation
of any of its officers or salaried employees or amended any other terms of
employment of such persons; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business
consistent with past practice; (v) made or obligated itself to make
capital expenditures out of the ordinary course of business consistent
with past practice; (vi) made any payment in respect of its liabilities
other than in the ordinary course of business consistent with past
practice; (vii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of transactions
involving in excess of $100,000 in the aggregate out of the ordinary
course of business, except for this Agreement and the transactions
contemplated hereby; (viii) suffered any theft, damage, destruction or
casualty loss, not covered by insurance and for which a timely claim was
filed, in excess of $100,000 in the aggregate; (ix) suffered any
extraordinary losses (whether or not covered by insurance); (x) waived,
canceled, compromised or released any rights having a value in excess of
$100,000 in the aggregate; (xi) made or adopted any change in its
accounting practice or policies; (xii) made any adjustment to its books
and records other than in respect of the conduct of its business
activities in the ordinary course consistent with past practice; (xiii)
entered
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into any transaction with any Affiliate other than intercompany
transactions in the ordinary course of business consistent with past
practice; (xiv) entered into any employment agreement; (xv) terminated,
amended or modified any agreement involving an amount in excess of
$100,000; (xvi) imposed any security interest or other Lien on any of its
assets other than in the ordinary course of business consistent with past
practice; (xvii) delayed paying any account payable which is due and
payable except to the extent being contested in good faith and except in
the ordinary course of its business; (xviii) made or pledged any
charitable contribution other than in the ordinary course of business
consistent with past practice; (xix) entered into any other transaction or
been subject to any event which has or may have a Material Adverse Effect
on the Company or any Subsidiary; or (xx) agreed to do or authorized any
of the foregoing.
4.11 LIABILITIES. Except as set forth on Schedule 4.11,
neither the Company nor any Subsidiary has any liabilities or obligations,
whether accrued, absolute, contingent or otherwise, except (i) to the
extent reflected or taken into account in the Current Balance Sheet and
not heretofore paid or discharged, (ii) to the extent specifically set
forth in or incorporated by express reference in any of the Schedules
attached hereto, (iii) liabilities incurred in the ordinary course of
business consistent with past practice since the date of the Current
Balance Sheet (none of which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or which arose out of
any action, suit, claim, governmental investigation or arbitration
proceeding), (iv) normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited financial statement and
which would not be material in the aggregate, and (v) liabilities incurred
in the ordinary course of business prior to the date of the Current
Balance Sheet which, in accordance with GAAP consistently applied, were
not recorded thereon. The consolidated net worth of the Company and its
Subsidiaries will be no less than $7.5 million as of the Closing Date.
4.12 LITIGATION. Except as set forth on Schedule 4.12, there
is no action, suit, or other legal or administrative proceeding or
governmental investigation, pending or, to the best of the Shareholders'
knowledge, threatened, anticipated or contemplated against, by or
affecting the Company or any Subsidiary or any of their properties or
assets, or the Shareholders, or which question the validity or
enforceability of this Agreement or the transactions contemplated hereby,
and there is no basis for any of the foregoing. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in
any proceeding to which the Company or any Subsidiary is or was a party
which have not been complied with in full or which continue to impose any
material obligations on the Company or any Subsidiary.
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4.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule
4.13:
(a) To the best of the Shareholders' knowledge, the
Company and each Subsidiary is in material compliance with all
Environmental, Health and Safety Laws (as defined herein) governing its
business, operations, properties and assets. Neither the Company nor any
Subsidiary is currently liable for any penalties, fines or forfeitures for
failure to comply with any Environmental, Health and Safety Laws.
(b) The Company and each Subsidiary has obtained, or
caused to be obtained, and to the best of the Shareholders' knowledge, is
in material compliance with, all applicable and material Licenses. Copies
of such Licenses have been provided to MTLM. There are no administrative
or judicial investigations, notices, claims or other proceedings pending
or threatened by any Governmental Authority or third parties against the
Company or any Subsidiary, their respective businesses, operations,
properties, or assets, which question the validity or entitlement of the
Company or any Subsidiary to any License wherein an unfavorable decision,
ruling or finding could have a Material Adverse Effect on the Company or
any Subsidiary.
(c) Neither the Company nor any Subsidiary has
received or is aware of any non-compliance order, warning letter,
investigation, notice of violation, claim, suit, action, judgment, or
administrative or judicial proceeding pending or threatened against or
involving the Company or any Subsidiary, issued by any Governmental
Authority or third party with respect to any Environmental, Health and
Safety Laws, which has not been resolved to the satisfaction of the
issuing Governmental Authority or third party and which could have a
Material Adverse Effect on the Company or any Subsidiary.
(d) To the best of the Shareholders' knowledge,
neither the Company nor any Subsidiary has generated, manufactured, used,
transported, transferred, stored, handled, treated, Discharged, Released
or disposed of, nor has it allowed or arranged for any third parties to
generate, manufacture, use, transport, transfer, store, handle, treat,
Discharge, Release or dispose of, Hazardous Substances or other Waste (as
defined herein) to or at any location other than a site lawfully permitted
to receive such Hazardous Substances or other waste for such purposes, nor
has it performed, arranged for or allowed by any method or procedure such
generation, manufacture, use, transportation, transfer, storage,
treatment, spillage, leakage, dumping, Discharge, Release or disposal in
material contravention of any Environmental, Health and Safety Laws. To
the best of the Shareholders' knowledge, neither the Company nor any
Subsidiary has generated, manufactured, used, stored, handled, treated,
Discharged, Released or disposed of, or allowed or arranged for any third
parties to generate, manufacture, use, store, handle, treat, spill, leak,
dump, discharge, release or dispose of, any material quantities of
Hazardous Substances or other waste upon property currently or previously
owned or leased by it, except as permitted by law.
(e) To the best of the Shareholders' knowledge,
neither the Company nor any Subsidiary has caused, nor allowed to be
caused or permitted, either by action or inaction, a Release or Discharge,
or threatened Release or Discharge, of any material quantity of Hazardous
Substance
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on, into or beneath the surface of any parcel of the Owned Properties or
the Leased Premises or to any properties adjacent thereto which would have
a Material Adverse Effect on the Company and its Subsidiaries. To the
best of Shareholders' knowledge, there has not occurred, nor is there
presently occurring, a Release or Discharge, or threatened Release or
Discharge, of any material quantity of Hazardous Substances on, into or
beneath the surface of any parcel of the Owned Properties or the Leased
Premises or to any properties adjacent thereto which would have a Material
Adverse Effect on the Company and its Subsidiaries.
(f) To the best of the Shareholders' knowledge,
neither the Company nor any Subsidiary has generated, handled,
manufactured, treated, stored, used, shipped, transported, transferred, or
disposed of, nor has it allowed or arranged, by contract, agreement or
otherwise, for any third parties to generate, handle, manufacture, treat,
store, use, ship, transport, transfer or dispose of, any Hazardous
Substances or other Waste to or at a site which, pursuant to CERCLA or any
similar state law has been placed or been proposed for placement on the
National Priorities List or its state equivalent. Neither the Company,
any Subsidiary nor the Shareholders has received notice, and neither the
Company, any Subsidiary nor the Shareholders has knowledge of any facts
which could give rise to any notice, that the Company or any Subsidiary is
a potentially responsible party for a federal or state environmental
cleanup site or for corrective action under Environmental Health and
Safety Laws. Neither the Company nor any Subsidiary has submitted or was
required to submit any notice pursuant to Section 103(c) of CERCLA with
respect to the Leased Premises or the Owned Properties. Neither the
Company nor any Subsidiary has received any written request for
information in connection with any federal or state environmental cleanup
site, or in connection with any of the real property or premises where the
Company or any Subsidiary has transported, transferred or disposed of
other Wastes. Neither the Company nor any Subsidiary has been required or
has undertaken any response or remedial actions or clean-up actions of any
kind at the request of any Governmental Authorities or at the request of
any other third party. To the best of the Shareholders' knowledge,
neither the Company nor any Subsidiary has any material liability under
any Environmental, Health and Safety Laws for personal injury, property
damage, natural resource damage, or clean up obligations.
(g) To the best of the Shareholders' knowledge,
there are no Aboveground Storage Tanks or Underground Storage Tanks on the
Owned Properties or the Leased Premises.
(h) Schedule 4.13 identifies (i) all material
environmental audits, assessments or occupational health studies, of which
the Company or the Shareholders are aware, undertaken by the Company, the
Subsidiaries or their agents, or by the Shareholders, or by any
Governmental Authority, or by any third party, relating to or affecting
the Company, the Subsidiaries or any of the Leased Premises or the Owned
Properties; and (ii) all material citations issued under OSHA, or similar
state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, relating to or affecting the Company or any
Subsidiary or any of the Leased Premises or the Owned Properties.
(i) Schedule 4.13 contains a list of the assets of
the Company and the Subsidiaries which have been confirmed to contain
"ASBESTOS" or "ASBESTOS-CONTAINING MATERIAL" (as such terms
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are identified under the Environmental, Health and Safety Laws). The
Company and each of the Subsidiaries has operated and continues to operate
in material compliance with all Environmental, Health and Safety Laws
governing the handling, use and exposure to and disposal of asbestos or
asbestos-containing materials. There are no claims, actions, suits,
governmental investigations or proceedings before any Governmental
Authority or third party pending, or threatened against or directly
affecting the Company, the Subsidiaries, or any of their respective assets
or operations relating to the use, handling or exposure to and disposal of
asbestos or asbestos-containing materials in connection with their assets
and operations.
(j) Schedule 4.13 identifies the operations and
activities, and locations thereof, which have been conducted and are being
conducted by the Company or any Subsidiary on any of the Owned Properties
or the Leased Premises which have involved the generation, accumulation,
storage, treatment, transportation, labeling, handling, manufacturing,
use, spilling, leaking, dumping, discharging, release or disposal of any
material quantities of Hazardous Substances.
(k) To the best of Shareholders' knowledge, none of
the Owned Properties or Leased Premises presently includes, or has been
constructed upon, any "WETLANDS" as defined under applicable
Environmental, Health and Safety Laws.
(l) As used in this Section 4.13, the term "COMPANY"
is deemed to refer to the Company or any of its Subsidiaries.
(m) As used in Section 4.13, the terms "OWNED
PROPERTIES" and "LEASED PREMISES" are deemed to refer to only the
properties currently owned or leased by the Company.
4.14 REAL ESTATE.
(a) Neither the Company nor any Subsidiary owns any
real property or any interest therein except as set forth on Schedule
4.14(a) (the "OWNED PROPERTIES"), which Schedule sets forth the location
and size of, and principal improvements and buildings on, the Owned
Properties. Except as set forth on Schedule 4.14(a), with respect to each
such parcel of Owned Property:
(i) the Company or a Subsidiary has good and
marketable title to each parcel of its Owned Property, free and
clear of any Lien other than (x) liens for real estate taxes not
yet due and payable; (y) recorded easements, covenants, and other
restrictions which do not materially impair the current use,
occupancy or value of the property subject thereto, and (z)
encumbrances and restrictions described in the title insurance
policies therefor, all of which policies have been previously
delivered to MTLM.
(ii) there are no pending or, to the best of the
Shareholders' knowledge, threatened condemnation proceedings,
suits or administrative actions relating to the
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Owned Properties or other matters affecting adversely the current
use, occupancy or value thereof;
(iii) to the best of the Shareholders' knowledge, (w)
the legal descriptions for the parcels of Owned Property
contained in the deeds thereof describe such parcels fully and
adequately; (x) the buildings and improvements are located within
the boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, local comprehensive
plan provisions, zoning laws and ordinances (and none of the
properties or buildings or improvements thereon are subject to
"PERMITTED NON-CONFORMING USE" or "PERMITTED NON-CONFORMING
STRUCTURE" classifications), building code requirements, permits,
licenses or other forms of approval by any Governmental
Authority, and do not encroach on any easement which may burden
the land; (y) the land does not serve any adjoining property for
any purpose inconsistent with the use of the land; and (z) the
Owned Properties are not located within any flood plain (such
that a mortgagee would require a mortgagor to obtain flood
insurance) or subject to any similar type restriction for which
any permits or licenses necessary to the use thereof have not
been obtained;
(iv) to the best of the Shareholders' knowledge, all
facilities have received all material approvals of Governmental
Authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been
operated and maintained in material compliance with applicable
laws, ordinances, rules and regulations;
(v) there are no Contracts granting to any party or
parties the right of use or occupancy of any portion of the
parcels of Owned Property, except as set forth on Schedule
4.14(b);
(vi) there are no outstanding options or rights of
first refusal to purchase the parcels of Owned Property, or any
portion thereof or interest therein;
(vii) there are no parties (other than the Company and
its Subsidiaries) in possession of the parcels of Owned Property,
other than tenants under any leases disclosed in Schedule 4.14(b)
who are in possession of space to which they are entitled;
(viii) all facilities located on the parcels of Owned
Property are supplied with utilities and other services necessary
for the operation of such facilities, including gas, electricity,
water, telephone, sanitary sewer and storm sewer, all of which
services, to the best of the Shareholders' knowledge, are
adequate in accordance with all applicable laws, ordinances,
rules and regulations, and, to the best of the Shareholders'
knowledge, are provided via public roads or via permanent,
irrevocable, appurtenant easements benefitting the parcels of
Owned Property;
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(ix) each parcel of Owned Property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of Owned Property; access to the property
is provided by paved public right-of-way; and there is no pending
or, to the best of the Shareholders' knowledge, threatened
termination of the foregoing access rights;
(x) to the best of the Shareholders' knowledge, all
improvements and buildings on the Owned Property are in good
repair (normal wear and tear excepted) and are safe for occupancy
and use, free from termites or other wood-destroying organisms;
the roofs thereof are watertight; and the structural components
and systems (including plumbing, electrical, air
conditioning/heating, and sprinklers) are in good working order
and adequate for the use of such Owned Property in the manner in
which presently used; and
(xi) there are no service contracts, management
agreements or similar agreements which affect the parcels of
Owned Property, except as set forth on Schedule 4.14(a).
(b) Schedule 4.14(b) sets forth a list of all
material leases, licenses or similar agreements ("LEASES") to which the
Company or any Subsidiary is a party (copies of which have previously been
furnished to MTLM), in each case, setting forth (A) the lessor and lessee
thereof and the date and term of each of the Leases, (B) the legal
description or street address of each property covered thereby, and (C) a
brief description of the principal improvements and buildings thereon (the
"LEASED PREMISES"), all of which are within the property set-back and
building lines of the respective property. The Leases are in full force
and effect and have not been amended except as set forth on Schedule
4.14(b), and, to the best of the Shareholders' knowledge, no party thereto
is in default or breach under any such Lease. No event has occurred
which, with the passage of time or the giving of notice or both, would
cause a material breach of or default under any of such Leases. To the
best of the Shareholders' knowledge, there is no breach or anticipated
breach by any other party to such Leases. Except as set forth on Schedule
4.14(b), with respect to each such Leased Premises:
(i) the Company or the Subsidiary has valid
leasehold interests in the Leased Premises leased by it, which
leasehold interests are free and clear of any Liens;
(ii) the portions of the buildings located on the
Leased Premises that are used in the business of the Company or a
Subsidiary are in good repair and condition, normal wear and tear
excepted, and are in the aggregate sufficient to satisfy the
Company or such Subsidiary's current and reasonably anticipated
normal business activities as conducted thereat;
(iii) each of the Leased Premises (a) has direct
access to public roads or access to public roads by means of a
perpetual access easement, such access being
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sufficient to satisfy the current and reasonably anticipated
normal transportation requirements of the Company or such
Subsidiary's respective business as presently conducted at such
parcel; and (b) is served by all utilities in such quantity and
quality as are sufficient to satisfy the current normal business
activities as conducted at such parcel; and
(iv) neither the Company nor any Subsidiary has
received notice of (a) any condemnation proceeding with respect
to any portion of the Leased Premises or any access thereto, and,
to the best of Shareholders' knowledge, no such proceeding is
contemplated by any Governmental Authority; or (b) any special
assessment which may affect any of the Leased Premises and, to
the best of the Shareholders' knowledge, no such special
assessment is contemplated by any Governmental Authority.
4.15 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Except as set forth on Schedule 4.15, the
Company and each Subsidiary has good and marketable title to all of its
respective Assets (as hereinafter defined), free and clear of any Liens or
restrictions on use. For purposes of this Agreement, the term "ASSETS"
means all of the properties and assets of the Company and its
Subsidiaries, other than the Owned Properties and the Leased Premises,
whether personal or mixed, tangible or intangible, wherever located.
(b) To the best of the Shareholders' knowledge, the
Fixed Assets (as hereinafter defined) currently in use or necessary for
the business and operations of the Company and its Subsidiaries are in
good operating condition, normal wear and tear excepted, and have been
maintained in accordance with sound industry practices. For purposes of
this Agreement, the term "FIXED ASSETS" means all vehicles, machinery,
equipment, tools, supplies, leasehold improvements, furniture and fixtures
used by or located on the premises of the Company or set forth on the
Current Balance Sheet or acquired by the Company or any Subsidiary since
the date of the Current Balance Sheet. Schedule 4.15 lists the vehicles
owned, leased or used by the Company or any Subsidiary to transport,
transfer, handle, dispose or haul Waste materials.
4.16 COMPLIANCE WITH LAWS.
(a) The Company and each Subsidiary is in material
compliance with all laws, regulations and orders applicable to it, its
respective business and operations (as currently conducted), the Assets,
the Owned Properties and the Leased Premises and any other properties and
assets (in each case currently owned or used by it). Except as set forth
on Schedule 4.16, neither the Company nor any Subsidiary has been cited,
fined or otherwise notified of any present material failure to comply with
any material laws, regulations or orders and no proceeding with respect to
any such material violation is pending or, to the best of the
Shareholders' knowledge, threatened.
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(b) Neither the Company nor any Subsidiary has made
any payment of funds in connection with its business which is prohibited
by law, and no funds have been set aside to be used in connection with its
business for any payment prohibited by law.
(c) The Company and each Subsidiary is in material
compliance with the terms and provisions of the Immigration Act. With
respect to each Employee (as defined in 8 C.F.R. 274a.1(f)) of the Company
for whom compliance with the Immigration Act as employer is required, to
the best of the Shareholders' knowledge, the Company and each Subsidiary
has on file a true, accurate and complete copy of (i) each Employee's Form
I-9 (Employment Eligibility Verification Form) and (ii) all other records,
documents or other papers prepared, procured and/or retained by the
Company and each Subsidiary pursuant to the Immigration Act. Neither the
Company nor any Subsidiary has been cited, fined, served with a Notice of
Intent to Fine or with a Cease and Desist Order, nor has any action or
administrative proceeding been initiated or threatened against it, by the
Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
(d) Except as fully described on Schedule 4.16,
neither the Company nor any Subsidiary is subject to any Contract, decree
or injunction which restricts the continued operation of any business or
the expansion thereof to other geographical areas, customers and suppliers
or lines of business.
4.17 LABOR AND EMPLOYMENT MATTERS. Except as set forth on
Schedule 4.17(a), neither the Company nor any Subsidiary is a party to or
bound by any collective bargaining agreement or any other agreement with a
labor union, and there have been no efforts by any labor union during the
24 months prior to the date hereof to organize any employees of the
Company or any Subsidiary into one or more collective bargaining units.
There is no pending or, to the best of the Shareholders' knowledge,
threatened labor dispute, strike or work stoppage which affects or which
may affect the business of the Company or any Subsidiary which may
interfere with its continued operations. Neither the Company nor any
Subsidiary has within the last 24 months committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and
there is no pending or, to the best of the Shareholders' knowledge,
threatened charge or complaint against the Company or any Subsidiary by or
with the National Labor Relations Board or any representative thereof.
There has been no strike, walkout or work stoppage involving any of the
employees of the Company or any Subsidiary during the 24 months prior to
the date hereof. The Shareholders are not aware that any executive or key
employee or group of employees has any plans to terminate his, her or
their employment with the Company or any Subsidiary as a result of this
Agreement or otherwise. Schedule 4.17(b) contains detailed information
about each contract, agreement or plan of the following nature, whether
formal or informal, and whether or not in writing, to which the Company or
any Subsidiary is a party or under which it has an obligation: (i)
employment agreements, (ii) employee handbooks, policy statements and
similar plans, (iii) noncompetition agreements, and (iv) consulting
agreements. The Company and each Subsidiary has complied in all material
respects with applicable laws, rules and regulations relating to
employment, civil rights and equal employment opportunities, including but
not limited to, the Civil Rights Act of 1964, the Fair Labor Standards Act
and the Worker Adjustment and Retraining Notification Act of 1988.
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4.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 4.18 contains
a list setting forth each employee benefit plan or arrangement of the
Company and each Subsidiary, including but not limited to employee pension
benefit plans, as defined in Section 3(2) of ERISA, multiemployer plans,
as defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans, stock
option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans
and policies, whether or not described in Section 3(3) of ERISA, in which
employees, their spouses or dependents, of the Company or any Subsidiary
participate ("EMPLOYEE BENEFIT PLANS") (true and accurate copies of which,
together with the most recent annual reports on Form 5500 and summary plan
descriptions with respect thereto, were furnished to MTLM).
(b) Compliance with Law. With respect to each
Employee Benefit Plan (i) each has been administered in all material
respects in compliance with its terms and with all applicable laws,
including, but not limited to, ERISA and the Internal Revenue Code of
1986, as amended (the "CODE"); (ii) no actions, suits, claims or disputes
are pending or, to the best of the Shareholders' knowledge, threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are
pending with any governmental or regulatory agency; (iv) there are no
facts which could give rise to any material liability in the event of any
such investigation, claim, action, suit, audit, review, or other
proceeding; (v) all material reports, returns, and similar documents
required to be filed with any governmental agency or distributed to any
plan participant have been duly or timely filed or distributed; and (vi)
no "PROHIBITED TRANSACTION" which could give rise to any material
liability of the Company or any Subsidiary has occurred within the meaning
of the applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a) (i)
the Internal Revenue Service has issued a favorable determination letter,
true and correct copies of which have been furnished to MTLM, that such
plans are qualified and exempt from federal income taxes, or an
application therefor has been filed with the Internal Revenue Service;
(ii) no such determination letter has been revoked nor has revocation been
threatened, nor has any amendment or other action or omission occurred
with respect to any such plan since the date of its most recent
determination letter or application therefor in any respect which would
adversely affect its qualification or materially increase its costs; (iii)
no such plan has been amended in a manner that would require security to
be provided in accordance with Section 401(a)(29) of the Code; (iv) no
reportable event (within the meaning of Section 4043 of ERISA) has
occurred, other than one for which the 30-day notice requirement has been
waived; and (v) as of the Effective Date except as disclosed on Schedule
4.18, the present value of all liabilities that would be "BENEFIT
LIABILITIES" under Section 4001(a)(16) of ERISA if benefits described in
Code Section 411(d)(6)(B) were included will not exceed the then current
fair market value of the assets of such plan (determined using the
actuarial assumptions used for the most recent actuarial valuation for
such plan); (vi) except as disclosed on Schedule 4.18, all contributions
to, and payments from and with respect to such plans, which have been
required to be made in accordance with such plans and, when
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applicable, Section 302 of ERISA or Section 412 of the Code, have been
timely made; (vii) all such contributions to the plans, and all payments
under the plans (except those to be made from a trust qualified under
Section 401(a) of the Code) and all payments with respect to the plans
(including, without limitation, PBGC and insurance premiums) for any
period ending before the Closing Date that are not yet, but will be,
required to be made are properly accrued and reflected on the Current
Balance Sheet or are disclosed on Schedule 4.18.
(d) Multiemployer Plans. With respect to any MPPA
Plan (i) all contributions required to be made with respect to employees
of the Company or any Subsidiary have been timely paid; (ii) neither the
Company nor any Subsidiary has incurred or is expected to incur, directly
or indirectly, any withdrawal liability under ERISA with respect to any
such plan (whether by reason of the transactions contemplated by the
Agreement or otherwise); (iii) Schedule 4.18 sets forth (A) the withdrawal
liability under ERISA to each MPPA Plan, (B) the date as of which such
amount was calculated, and (C) the method for determining the withdrawal
liability; and (iv) no such plan is (or is expected to be) insolvent or in
reorganization and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists or is expected to exist with respect to any such plan.
(e) Welfare Plans. Other than as disclosed in
Schedule 4.18, (i) neither the Company nor any Subsidiary is obligated
under any Welfare Plan, whether or not disclosed in Schedule 4.18, to
provide medical or death benefits with respect to any employee or former
employee of the Company, any Subsidiary or their predecessors after
termination of employment, other than as required by Section 4980B of the
Code; (ii) the Company and each Subsidiary have complied in all material
respects with the notice and continuation coverage requirements of Section
4980B of the Code and the regulations thereunder with respect to each
Welfare Plan that is, or was during any taxable year for which the statute
of limitations on the assessment of federal income taxes remains, open, by
consent or otherwise, a group health plan within the meaning of Section
5000(b)(1) of the Code, and (iii) there are no reserves, assets, surplus
or prepaid premiums under any Welfare Plan which is an Employee Benefit
Plan. The consummation of the transactions contemplated by this Agreement
will not entitle any individual to severance pay, and, will not accelerate
the time of payment or vesting, or increase the amount of compensation,
due to any individual.
(f) Controlled Group Liability. Neither the
Company, any Subsidiary nor any entity that would be aggregated with them
under Code Section 414(b), (c), (m) or (o): (i) has ever terminated or
withdrawn from an employee benefit plan under circumstances resulting (or
expected to result) in liability to the Pension Benefit Guaranty
Corporation ("PBGC"), the fund by which the employee benefit plan is
funded, or any employee or beneficiary for whose benefit the plan is or
was maintained (other than routine claims for benefits); (ii) has any
assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has failed to pay
premiums to the PBGC when due; (iv) is subject to (or expected to be
subject to) an excise tax under Code Section 4971; (v) has engaged in any
transaction which would give rise to liability under Section 4069 or
Section 4212(c) of ERISA; or (vi) has violated in any material respect
Code Section 4980B or Section 601 through 608 of ERISA.
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(g) Other Liabilities. Except as set forth on
Schedule 4.18, (i) none of the Employee Benefit Plans obligates the
Company or any Subsidiary to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by
this Agreement or solely as a result of a "CHANGE OF CONTROL" (as such
term is defined in Section 280G of the Code), (ii) all required or
discretionary (in accordance with historical practices) payments,
premiums, contributions, reimbursements, or accruals for all periods
ending prior to or as of the Effective Date shall have been made or
properly accrued on the Current Balance Sheet or will be properly accrued
on the books and records of the Company and the Subsidiaries as of the
Effective Date, and (iii) none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current Balance Sheet
or the books and records of the Company and the Subsidiaries.
4.19 TAX MATTERS. Except as set forth in Schedule 4.19
hereto, all Tax Returns required to be filed prior to the date hereof with
respect to the Company, its Subsidiaries or any of its income, properties,
franchises or operations have been filed, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all
such Tax Returns are true, complete and accurate in all material respects.
All Taxes due and payable by or with respect to the Company and its
subsidiaries have been paid or accrued on the Current Balance Sheet or
will be accrued on its books and records as of the Closing. Except as set
forth in Schedule 4.19 hereto: (i) with respect to each taxable period of
the Company and each Subsidiary after January 1, 1992, no taxable period
has been audited by the relevant taxing authority; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for
any amount of Taxes has been asserted or assessed by any taxing authority;
(iii) neither the Company nor any Subsidiary has consented to extend the
time in which any Taxes may be assessed or collected by any taxing
authority; (iv) neither the Company nor any Subsidiary has requested or
been granted an extension of the time for filing any Tax Return to a date
later than the Closing Date; (v) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress,
pending or threatened against or with respect to the Company or any
Subsidiary regarding Taxes; (vi) neither the Company nor any Subsidiary
has made an election or filed a consent under Section 341(f) of the Code
(or any corresponding provision of state, local or foreign law) on or
prior to the Closing Date; (vii) there are no Liens for Taxes (other than
for current Taxes not yet due and payable) upon the assets of the Company
or any Subsidiary; (viii) neither the Company nor any Subsidiary will be
required (A) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, to include any adjustment
under Section 481(c) of the Code (or any corresponding provision of state,
local or foreign law) in taxable income for any taxable period (or portion
thereof) beginning after the Closing Date or (B) as a result of any
"CLOSING AGREEMENT," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign law), to include any
item of income or exclude any item of deduction from any taxable period
(or portion thereof) beginning after the Closing Date; (ix) neither the
Company nor any Subsidiary is a party to or bound by any tax allocation or
tax sharing agreement or has any current or potential contractual
obligation to indemnify any other Person with respect to Taxes; (x) there
is no basis for any assessment, deficiency notice, 30-day letter or
similar notice with respect to any Tax to be issued to the Company or any
Subsidiary with respect to any period on or before the Closing Date; (xi)
neither the Company nor any Subsidiary has made any payments, and is or
will not become obligated (under any contract entered into on or before
the Closing Date) to
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make any payments, that will be non-deductible under Section 280G of the
Code (or any corresponding provision of state, local or foreign law);
(xii) neither the Company nor any Subsidiary has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of
the Code (or any corresponding provision of state, local or foreign law)
during the applicable period specified in Section 897(c)(1)(a)(ii) of the
Code (or any corresponding provision of state, local or foreign law);
(xiii) no claim has ever been made by a taxing authority in a jurisdiction
where the Company or a Subsidiary, as the case may be, does not file Tax
Returns that is or may be subject to Taxes assessed by such jurisdiction;
(xiv) the Company and its Subsidiaries do not have any permanent
establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; (xv)
true, correct and complete copies of all income and sales Tax Returns
filed by or with respect to the Company and its Subsidiaries for the past
two years has been furnished or made available to MTLM; and (xvi) the
Company and its Subsidiaries will not be subject to any Taxes pursuant to
Section 1374 or Section 1375 of the Code (or any corresponding provision
of state, local or foreign law) for the period ending at the Closing Date
for any period for which a Tax Return has not been filed.
4.20 INSURANCE. The Company and each Subsidiary is covered by
valid, outstanding and enforceable policies of insurance issued to it by
reputable insurers covering its properties, assets and businesses against
risks of the nature normally insured against by businesses in the same or
similar lines of business and in coverage amounts typically and reasonably
carried by such businesses (the "INSURANCE POLICIES"), provided, however,
the Company and its Subsidiaries generally do not insure their machinery
and equipment except as the Company or its Subsidiaries may be required to
insure such assets by third party lenders or lessors. Such Insurance
Policies are in full force and effect, and all premiums due thereon have
been paid. As of the Closing Date each of the Insurance Policies will be
in full force and effect. None of the Insurance Policies will lapse or
terminate as a result of the transactions contemplated by this Agreement.
The Company and each Subsidiary has complied with the provisions of such
Insurance Policies. Schedule 4.20 contains (i) a complete and correct
list of all Insurance Policies and all amendments and riders thereto
(copies of which have been provided to MTLM) and (ii) a detailed
description of each pending claim under any of the Insurance Policies for
an amount in excess of $50,000 that relates to loss or damage to the
properties, assets or businesses of the Company or any Subsidiary. Neither
the Company nor any Subsidiary has failed to give, in a timely manner, any
notice required under any of the Insurance Policies to preserve its rights
thereunder.
4.21 RECEIVABLES. All of the Receivables (as hereinafter
defined) are valid and legally binding, represent bona fide transactions
and arose in the ordinary course of business of the Company and its
Subsidiaries. Except as set forth on Schedule 4.21, all of the
Receivables are good and collectible receivables, and will be collected in
full in accordance with the terms of such receivables (and in any event
within six months following the Closing), without set off or
counterclaims, subject to the allowance for doubtful accounts, if any, set
forth on the Current Balance Sheet as reasonably adjusted since the date
of the Current Balance Sheet in the ordinary course of business consistent
with past practice. For purposes of this Agreement, the term
"RECEIVABLES" means all receivables of the
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Company and the Subsidiaries, including all trade account receivables
arising from the provision of services or sale of inventory, but excluding
notes receivable, and insurance proceeds receivable.
4.22 PERMITS. Except as set forth on Schedule 4.22, the
Company and each Subsidiary possess all material Permits for its business
and operations, including the operation of the Owned Properties and Leased
Premises. All such Permits are valid and in full force and effect, the
Company and each Subsidiary is in material compliance with the
requirements thereof, and no proceeding is pending or threatened to revoke
or amend any of them. None of such Permits is or will be impaired or in
any way affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
4.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and
Leased Premises constitute, in the aggregate, all of the assets and
properties necessary for the conduct of the business of the Company and
the Subsidiaries in the manner in which and to the extent to which such
business is currently being conducted. To the best knowledge of the
Shareholders, no current supplier to the Company or any Subsidiary of
items essential to the conduct of its business will or has threatened to
terminate its respective business relationship with it for any reason.
Except as set forth on Schedule 4.23, neither the Company nor any
Subsidiary has any direct or indirect interest in any customer, supplier
or competitor of the Company or any Subsidiary, or in any person from whom
or to whom the Company or any Subsidiary leases real or personal property.
Except as set forth on Schedule 4.23, no officer, director or shareholder
of the Company or any Subsidiary, nor any person related by blood or
marriage to any such person, nor any entity in which any such person owns
any beneficial interest, is a party to any Contract or transaction with
the Company or any Subsidiary or has any interest in any property used by
the Company.
4.24 INTELLECTUAL PROPERTY. The Company and its Subsidiaries
has full legal right, title and interest in and to all trademarks,
servicemarks, tradenames, copyrights, know-how, patents, trade secrets,
licenses (including licenses for the use of computer software programs),
and other intellectual property used in the conduct of their respective
businesses (the "INTELLECTUAL PROPERTY"). The conduct of the business of
the Company and its Subsidiaries as presently conducted, and the
unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property, does not infringe or misappropriate any rights held
or asserted by any Person, and to the best of the Shareholders' knowledge,
no Person is infringing on the Intellectual Property. No payments are
required for the continued use of the Intellectual Property. None of the
Intellectual Property has ever been declared invalid or unenforceable, or
is the subject of any pending or, to the best of the Shareholders'
knowledge, threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
4.25 CONTRACTS. Schedule 4.25 sets forth a list of each
Contract to which the Company and its Subsidiaries is a party or by which
its properties and assets are bound and which is material to its business,
assets, properties or prospects (the "DESIGNATED CONTRACTS"), true and
correct copies of which have been provided to MTLM. The copy of each
Designated Contract furnished to MTLM
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is a true and complete copy of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement.
Except as set forth on Schedule 4.25, neither the Company nor any
Subsidiary has violated any of the material terms or conditions of any
Designated Contract or any term or condition which would permit
termination or material modification of any Designated Contract, and, to
the best of the Shareholders' knowledge, all of the covenants to be
performed by any other party thereto have been fully performed and there
are no claims for breach or indemnification or notice of default or
termination under any Designated Contract. Except as set forth on Schedule
4.25, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a material default by the
Company or any Subsidiary under any Designated Contract, and no such event
has occurred which constitutes or would constitute a material default by
any other party. Neither the Company nor any Subsidiary is subject to any
material liability or payment resulting from renegotiation of amounts paid
it under any Designated Contract. As used in this Section, Designated
Contracts shall include, without limitation, (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust,
conditional sale or title retention agreements, security agreements,
equipment financing obligations or guaranties, or other sources of
contingent liability in respect of any indebtedness or obligations to any
other Person, or letters of intent or commitment letters with respect to
same; (b) contracts obligating the Company to purchase or sell products or
services; (c) leases of real property, and leases of personal property not
cancelable without penalty on notice of 60 days or less or calling for
payment of an annual gross rental exceeding $50,000; (d) distribution,
sales agency or franchise or similar agreements, or agreements providing
for an independent contractor's services, or letters of intent with
respect to same; (e) employment agreements, management service agreements,
consulting agreements, confidentiality agreements, noncompetition
agreements and any other agreements relating to any employee, officer or
director of the Company or any Subsidiary; (f) licenses, assignments or
transfers of trademarks, trade names, service marks, patents, copyrights,
trade secrets or know how, or other agreements regarding proprietary
rights or intellectual property; (g) any Contract relating to pending
capital expenditures by the Company or any Subsidiary; and (h) other
material Contracts or understandings, irrespective of subject matter and
whether or not in writing, not entered into in the ordinary course of
business by the Company or any Subsidiary and not otherwise disclosed on
the Schedules.
4.26 CUSTOMER LISTS AND RECURRING REVENUE. The Company and
the Shareholders have made available to MTLM for MTLM's review, a true,
correct and complete list of each of the Company and each Subsidiary's 20
largest customers ("MATERIAL CUSTOMERS") and suppliers together with the
applicable percentage of total sales or purchases, as applicable. True,
correct and complete copies of any agreements with such customers or
suppliers which are anticipated to endure beyond the Closing have been
furnished by the Shareholders to MTLM. Other than Material Customers, no
customer of the Company or any Subsidiary as of the date of this Agreement
accounts for more than 1% of its combined annual revenue.
4.27 ACCURACY OF INFORMATION FURNISHED BY THE SHAREHOLDERS.
No representation, statement or information made or furnished by the
Shareholders to MTLM or any of MTLM's representatives, including those
contained in this Agreement and the various Schedules attached hereto and
the other information and statements referred to herein and previously
furnished by the
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Company, the Subsidiaries and the Shareholders, contains or shall contain
any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein not
misleading in light of the circumstances in which they were made. The
Shareholders have provided MTLM with true, accurate and complete copies of
all documents listed or described in the various Schedules attached
hereto.
4.28 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring his interest in the MTLM
Shares for his own account for investment and not with a view to, or for
the sale in connection with, any distribution of his interest, except in
compliance with applicable state and federal securities laws. Each of the
Shareholders has been provided, to his satisfaction, the opportunity to
discuss the transactions contemplated hereby with MTLM and has had the
opportunity to obtain such information pertaining to MTLM as has been
requested, including but not limited to filings made by MTLM with the SEC
under the Exchange Act. Each of the Shareholders is an "ACCREDITED
INVESTOR" within the meaning of Regulation D promulgated under the
Securities Act. Each of the Shareholders has such knowledge and
experience in business and financial matters that he is capable of
evaluating the merits and risks of an investment in MTLM Shares, and is
capable of bearing the economic risks of such investment and is able to
bear a complete loss of his investment in MTLM Shares. Each of the
Shareholders acknowledges that MTLM Shares have not been registered under
the Securities Act and understands that MTLM Shares must be held
indefinitely unless they are subsequently registered under the Securities
Act or such sale is permitted pursuant to an available exemption from such
registration requirement.
4.29 BUSINESS LOCATIONS. As of the date hereof, neither the
Company nor any Subsidiary has any office or place of business other than
as identified on Schedules 4.14(a) and 4.14(b) and the Company and each
Subsidiary's principal place of business and chief executive office (as
such terms are used in subsection 9-401 of the Uniform Commercial Code as
enacted in the State of Illinois as of the date hereof) are indicated on
Schedule 4.14(a) or 4.14(b), and, all locations where the equipment,
inventory, chattel paper and books and records of the Company and the
Subsidiaries are located as of the date hereof are fully identified on
Schedules 4.14(a) and 4.14(b).
4.30 NAMES; PRIOR ACQUISITIONS. All names under which the
Company and each Subsidiary does business as of the date hereof are
specified on Schedule 4.30. Except as set forth on Schedule 4.30, neither
the Company nor any Subsidiary has changed its name or used any assumed or
fictitious name, or been the surviving entity in a merger, acquired any
business or changed its principal place of business or chief executive
office, within the past 10 years.
4.31 NO COMMISSIONS. Except as set forth on Schedule 4.31,
neither the Company, any Subsidiary nor the Shareholders have incurred any
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated
hereby.
4.32 INVENTORY. All Assets that consist of inventory
(including raw materials and work-in-progress): (i) were acquired in the
ordinary course of business consistent with past practice; (ii) are,
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in the aggregate, of a quality, quantity, and condition useable or
saleable in the ordinary course of business within the Company and the
Subsidiary's normal inventory turnover experience; and (iii) are valued
at the lower of cost or net realizable market value. Neither the Company
nor any Subsidiary has any material liability with respect to the return
or repurchase of any goods in the possession of any customer.
4.33 IDENTIFICATION, ACQUISITION AND DISPOSITION OF MATERIAL
ASSETS. Schedule 4.33 sets forth a listing of all material Assets
(including real, personal and mixed) acquired or disposed of by the
Company or any Subsidiary since December 31, 1996.
4.34 RESTRICTIONS. Schedule 4.34 sets forth a list of all
non-competition, non-solicitation, confidentiality and other restrictive
covenants to which the Company, any Subsidiary and/or any Shareholder is a
party or otherwise bound. Except as set forth on Schedule 4.34, there are
no contracts or other conditions, circumstances, events or agreements
which would in any way limit or restrict the rights of MTLM, MTLM's
Affiliates, the Company or its Subsidiaries from engaging in any business
anywhere in the world.
4.35 FULL DISCLOSURE. No statement by the Company contained
in this Article IV and the Schedules hereto or any written statement or
certificate furnished to MTLM as of its respective date contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
materially and adversely misleading in light of the circumstances under
which they were made.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE CLOSING .
Except as set forth on Schedule 5.1, the Company covenants and agrees
that, between the date of this Agreement and the Closing Date, the
business of the Company and each Subsidiary shall be conducted only in,
and the Company and each Subsidiary shall not take any action except in,
the ordinary course of business, consistent with past practice and in
compliance with all rules, regulations and laws. The Company and each
Subsidiary shall use its best efforts to preserve intact its respective
business organization, to keep available the services of its respective
current officers, employees and consultants, and to preserve its
respective present relationships with customers, suppliers and other
persons with which it has significant business relations. By way of
amplification and not limitation, except as contemplated by this
Agreement, neither the Company nor any Subsidiary shall, between the date
of this Agreement and the Closing Date, directly or indirectly, do or
propose or agree to do any of the following without the prior written
consent of MTLM, which consent shall not be unreasonably withheld:
(a) amend or otherwise change its articles of
incorporation or bylaws;
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(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or encumbrance of
(i) with respect to the Company or any Subsidiary, any shares of its
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest, of it, or, (ii) any of
their respective assets, tangible or intangible, except in the ordinary
course of business consistent with past practice;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock;
(e) (i) acquire (including, without limitation, for
cash or shares of stock, by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other business
organization or division thereof or any assets, or make any investment
either by purchase of stock or securities, contributions of capital or
property transfer, or, except in the ordinary course of business,
consistent with past practice, purchase any property or assets of any
other Person, (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans or advances, or (iii) enter into any Contract other than in
the ordinary course of business, consistent with past practice;
(f) increase the compensation payable or to become
payable to its respective officers or directors, or, except as presently
bound to do, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its respective directors or
officers, or establish, adopt, enter into or amend or take any action to
accelerate any rights or benefits under any collective bargaining, bonus,
profit sharing, trust, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees;
(g) take any action other than in the ordinary
course of business and in a manner consistent with past practice with
respect to accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of due and payable liabilities reflected or reserved against in
its financial statements, as appropriate, or liabilities incurred after
the date hereof in the ordinary course of business and consistent with
past practice and other than the payment of a pending claim by Employers
Insurance of Wausau (as described on Schedule 4.12) in an amount not to
exceed $1.4 million;
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(i) increase or decrease prices charged to its
respective customers, except for previously announced price changes or
except in the ordinary course of business, or take any other action which
might reasonably result in any material increase in the loss of customers
through non-renewal or termination of contracts or other causes; or
(j) agree, in writing or otherwise, to take or
authorize any of the foregoing actions or any action which would make any
representation or warranty in Article IV untrue or incorrect.
5.2 CONDUCT OF BUSINESS OF MTLM PENDING THE CLOSING. Except
as set forth on Schedules 2.28 and 5.2, MTLM covenants and agrees that,
between the date of this Agreement and the Closing Date, the business of
MTLM and each MTLM Subsidiary shall be conducted only in, and MTLM and
each MTLM Subsidiary shall not take any action except in, the ordinary
course of business, consistent with past practice and in material
compliance with all rules, regulations and laws. MTLM and each MTLM
Subsidiary shall use its best efforts to preserve intact its respective
business organization, to keep available the services of its respective
current officers, employees and consultants, and to preserve its
respective present relationships with customers, suppliers and other
persons with which it has significant business relations. By way of
amplification and not limitation, except as contemplated by this
Agreement, neither MTLM nor any MTLM Subsidiary shall, between the date of
this Agreement and the Closing Date, directly or indirectly, do or propose
or agree to do any of the following without the prior written consent of
the Shareholders, which consent shall not be unreasonably withheld:
(a) amend or otherwise change its charter or bylaws;
(b) except for the issuance of common stock in
connection with any of the mergers, acquisitions or other transactions
contemplated by Section 5.2(e) below, private placements of common stock
not to exceed $15 million in the aggregate, the private placement of up to
$10 million of securities convertible into or exchangeable for common
stock of MTLM and/or the sale of non-convertible high yield debt of MTLM
of up to $200 million, or the incurrence of a non-convertible bridge loan
which will be repaid with the proceeds of the foregoing, issue, sell,
pledge, dispose of, grant, encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of (i) with respect to MTLM or
any MTLM Subsidiary, any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest,
of it, or, (ii) any of their respective assets, tangible or intangible,
except in the ordinary course of business consistent with past practice;
(c) increase the compensation payable or to become
payable to its respective officers or directors, or, except as presently
bound to do, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its respective directors or
officers, or establish, adopt, enter into or amend or take any action to
accelerate any rights or benefits under any collective bargaining, bonus,
profit sharing, trust, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees;
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(d) take any action other than in the ordinary
course of business and in a manner consistent with past practice with
respect to accounting policies or procedures; or
(e) except for mergers or acquisitions by MTLM of
The Xxxxx Corporation and its affiliates, Kankakee Scrap Corporation and
its affiliates, Proler Southwest Inc. and Proler Steelworks L.L.C., and a
joint venture or acquisition of a joint venture interest from Perlco,
L.L.C. (each substantially on the terms and conditions set forth in the
respective letters of intent relating thereto, true and complete copies of
which have been given to the Shareholders) and any acquisitions involving
consideration of less than $5 million, and any contracts, agreements and
transactions related thereto, (i) acquire (including, without limitation,
for cash or shares of stock, by merger, consolidation, or acquisition of
stock or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any
investment either by purchase of stock or securities, contributions of
capital or property transfer, or, except in the ordinary course of
business of a MTLM Subsidiary, consistent with past practice, purchase any
property or assets of any other Person, (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances, or (iii) enter
into any Contract other than in the ordinary course of business of a MTLM
Subsidiary, consistent with past practice;
(f) agree, in writing or otherwise, to take or
authorize any of the foregoing actions or any action which would make any
representation or warranty in Article II untrue or incorrect.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 FURTHER ASSURANCES. Each party shall execute and deliver
such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry
out and comply with all of the terms of this Agreement and the
transactions contemplated hereby.
6.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause
the Company to comply with all of the respective covenants of the Company
under this Agreement.
6.3 COOPERATION. Each of the parties agrees to cooperate
with the other in the preparation and filing of all forms, notifications,
reports and information, if any, required or reasonably deemed advisable
pursuant to any law, rule or regulation or the rules of any exchange on
which the Common Stock is listed (the Nasdaq Stock Market) in connection
with the transactions contemplated by this Agreement and to use their
respective best efforts to agree jointly on a method to overcome any
objections by any Governmental Authority to any such transactions.
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6.4 ACCESS TO INFORMATION. From the date hereof to the
Closing Date, the Company and MTLM shall (and shall cause its respective
directors, officers, employees, auditors, counsel and agents to) afford
each other and their officers, employees, auditors, counsel and agents
reasonable access at all reasonable times to its properties, offices, and
other facilities, to its officers and employees and to all books and
records, and shall furnish such persons with all financial, operating and
other data and information as may be requested. No information provided
to or obtained by any of the parties hereto shall affect any
representation or warranty in this Agreement.
6.5 NOTIFICATION OF CERTAIN MATTERS. The Shareholders and
MTLM shall give prompt notice to the other of the occurrence or
non-occurrence of any event which would likely cause any representation or
warranty contained herein to be untrue or inaccurate, or any covenant,
condition, or agreement contained herein not to be complied with or
satisfied.
6.6 TAX TREATMENT. Each party to this Agreement has sought
and received its own advice as to the tax treatment of the transactions
covered by this Agreement and is not relying on any opinions of the other
parties or their respective advisers with respect thereto. All parties
hereto agree to fully and completely comply with the reporting
requirements of the Internal Revenue Service.
6.7 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no party
hereto or their respective Affiliates, employees, agents and
representatives shall disclose to any third party this Agreement or the
subject matter or terms hereof without the prior consent of the other
parties hereto. No press release or other public announcement related to
this Agreement or the transactions contemplated hereby shall be issued by
any party hereto without the prior approval of the other parties, except
that MTLM may make such public disclosure which MTLM believes in good
faith is required by law or by the terms of any listing agreement with or
requirements of a securities exchange.
6.8 NO OTHER DISCUSSIONS. Neither the Company, nor the
Shareholders, and their respective Affiliates, employees, agents or
representatives shall (i) initiate or encourage the initiation by others
of discussions or negotiations with third parties or respond to
solicitations by third persons relating to any merger, sale or other
disposition of any substantial part of the assets, business or properties
of the Company (whether by merger, consolidation, sale of stock or
otherwise) or (ii) enter into any agreement or commitment (whether or not
binding) with respect to any of the foregoing transactions. The
Shareholders will immediately notify MTLM if any third party attempts to
initiate any solicitation, discussion or negotiation with respect to any
of the foregoing transactions.
6.9 RESTRICTIVE COVENANTS. In order to assure that MTLM will
realize the benefits of this Agreement and in consideration of the
transactions set forth in this Agreement, the Shareholders agree with MTLM
that they shall not for a period of thirty-six (36) months from the later
of the Closing Date or the date each such Shareholder ceases to be an
employee, officer or director of MTLM or the Company (with regard to each
Shareholder, a "TERMINATION DATE"):
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(a) directly or indirectly, alone or as a partner,
joint venturer, officer, director, employee, consultant, agent,
independent contractor or stockholder of any company or business, engage
in any business activity in the Restricted Territory (as defined below),
and which is directly or indirectly in competition with the business
conducted by the Company at the Closing Date; provided, however, that, the
beneficial ownership of less than 5% of the shares of stock of any
corporation having a class of equity securities actively traded on a
national securities exchange or over-the-counter market shall not be
deemed, in and of itself, to violate the prohibitions of this Section. As
used in this Section 6.9, the term "RESTRICTED TERRITORY" means (i) with
respect to Xxxxxx X. Xxxxx, all states in which MTLM or any of its
Subsidiaries operates a facility on the Termination Date, and (ii) with
respect to Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx, all states in which the
Surviving Corporation or its Subsidiaries operates a facility on the
Termination Date;
(b) directly or indirectly (i) induce any Person
which is a customer of the Company or any Subsidiary at the Closing Date
to patronize any business directly or indirectly in competition with the
business conducted by the Company and its Subsidiaries; (ii) canvass,
solicit or accept from any Person which is a customer of the Company or
any Subsidiary, any such competitive business, or (iii) request or advise
any Person which is a customer of the Company or any Subsidiary at the
Closing Date to withdraw, curtail or cancel any such customer's business
with the Company or any Subsidiary;
(c) directly or indirectly employ, or knowingly
permit any company or business directly or indirectly controlled by him,
to employ, any person who was employed by the Company or any Subsidiary at
or within six months prior to the Closing Date, or in any manner seek to
induce any such Person to leave his or her employment;
(d) directly or indirectly, at any time following
the Closing Date, in any way utilize, disclose, copy, reproduce or retain
in his possession any of the Company or any Subsidiary's proprietary
rights or records, including, but not limited to, any of their customer
lists.
The Shareholders agree and acknowledge that the restrictions contained in
this Section 6.9 are reasonable in scope and duration and are necessary to
protect MTLM after the Closing Date. If any provision of this Section as
applied to any party or to any circumstance is adjudged by a court to be
invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because
of the duration of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to
reduce the duration and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision shall
then be enforceable and shall be enforced. The parties agree and
acknowledge that the breach of this Section will cause irreparable damage
to MTLM and upon breach of any provision of this Section, MTLM shall be
entitled to injunctive relief, specific performance or other equitable
relief; provided, however, that this shall in no way limit any other
remedies which MTLM may have (including, without limitation, the right to
seek monetary damages).
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6.10 ENVIRONMENTAL ASSESSMENT. MTLM shall be entitled to have
conducted prior to Closing an environmental assessment and compliance
review of the Owned Properties and Leased Premises (hereinafter referred
to as the "ENVIRONMENTAL ASSESSMENT") and Xxxxx'x operations. The
Environmental Assessment may include a physical examination of the Owned
Properties or Leased Premises, and any structures, facilities, or
equipment located thereon, review of pertinent permits, reports and
records, documents, and Licenses of the Company and its Subsidiaries.
MTLM shall not be entitled to take any soil samples, ground and surface
water samples, or storage tank testing unless MTLM obtains Xxxxx'x prior
written consent. The Shareholders shall provide MTLM or its designated
agents or consultants with the access to such property and all permits,
records and reports which MTLM, their respective agents or consultants
require to conduct the Environmental Assessment. If the Environmental
Assessment identifies any conditions or environmental contamination which
requires remediation or further evaluation under the Environmental,
Health, and Safety Laws or if the results of the Environmental Assessment
are otherwise not satisfactory to MTLM in its sole discretion, and if the
Company elects not to remediate or otherwise satisfy MTLM (in the sole
discretion of MTLM), then MTLM may elect not to close the transactions
contemplated by this Agreement as provided in Section 12.1.
6.11 TRADING IN MTLM'S COMMON STOCK. Except as otherwise
expressly consented to by MTLM, from the date of this Agreement until the
Closing Date, neither the Company, nor the Shareholders (nor any
Affiliates thereof) will directly or indirectly purchase or sell
(including short sales) any shares of the Common Stock in any transactions
effected on the Nasdaq Stock Market or otherwise.
6.12 OTHER AGREEMENTS. Upon the Closing, each party shall
cause their respective affiliates to execute and deliver the following
agreements (collectively, the "COLLATERAL AGREEMENTS"):
(a) an employment agreement for each of (i) Xxxxxx
X. Xxxxx, (ii) Xxxxx X. Xxxxx, (iii) Xxxxxx X. Xxxxxx, (iv) T.
Xxxxxxxx Xxxxxxxx, and (v) Xxxxxxx X. Xxxxx in a form reasonably
acceptable to the parties hereto, which form shall be agreed upon
on or prior to May 30, 1997 and attached to this Agreement as an
exhibit. The parties agree that the employment agreements will
contain non-competition covenants and that such covenants are an
integral part of this Agreement;
(b) the Stockholders' Agreement in the form attached
hereto as Exhibit B (the "STOCKHOLDERS AGREEMENT");
(c) the Escrow Agreement;
(d) warrants in the form of Exhibit C to be issued
to each of the Shareholders pursuant to their employment
agreements as follows:
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(i) Xxxxxx X. Xxxxx shall receive warrants
exercisable for 755,172 MTLM Shares for a period of five
(5) years, half of which will have an exercise price of
$5.91 per share and half of which will have an exercise
price per share equal to seventy-five percent (75%) of
the last sales price of a MTLM Share on the day before
the Closing Date;
(ii) Xxxxx X. Xxxxx shall receive warrants
exercisable for 582,759 MTLM Shares for a period of five
(5) years, half of which will have an exercise price of
$5.91 per share and half of which will have an exercise
price per share equal to seventy-five percent (75%) of
the last sales price of a MTLM Share on the day before
the Closing Date; and
(iii) Xxxxxxx X. Xxxxx shall receive warrants
exercisable for 162,069 MTLM Shares for a period of five
(5) years, half of which will have an exercise price of
$5.91 per share and half of which will have an exercise
price per share equal to seventy-five percent (75%) of
the last sales price of a MTLM Share on the day before
the Closing Date.
(e) the Registration Rights Agreement in the form
attached hereto as Exhibit D.
6.13 HSR ACT COMPLIANCE. The Company, the Shareholders and
MTLM will as promptly as practicable, but in no event later than 10
business days following the execution and delivery of this Agreement, file
or cause to be filed with the United States Federal Trade Commission (the
"FTC") and the United State Department of Justice (the "DOJ") the
notification and report form required for the transactions contemplated
hereby and any supplemental information requested in connection therewith
pursuant to the HSR Act. Any such notification and report form and
supplemental information will be in substantial compliance with the
requirements of the HSR Act. Each of MTLM, the Company and the
Shareholders will furnish to the others such necessary information and
reasonable assistance as the others may request in connection with the
preparation of any filing or submission which is necessary under the HSR
Act. Each of the Company, the Shareholders and MTLM will keep each other
apprised of the status of any communications with, and inquiries or
requests for additional information addressed to the entity that filed a
notification and report form as an acquired or acquiring person from, the
FTC or the DOJ and shall comply or cause its respective filing person to
comply promptly with any such inquiry or request. Each of the Company,
the Shareholders and MTLM will use commercially reasonable efforts to
obtain any clearance required under the HSR Act for the purchase and sale
of the Xxxxx Shares.
6.14 CORPORATE AUTHORITY. MTLM, the Company and the
Shareholders agree to use their individual best efforts to obtain the
authorizations required for each to execute and deliver this Agreement and
to perform each of their respective obligations hereunder and to
consummate the transactions contemplated hereby.
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6.15 CERTIFICATION OF TAX STATUS. The Shareholders shall
deliver to MTLM either: (i) a Certificate of Nonforeign Status under
Treasury Regulation Section 1.1445-2(b)(1), or (ii) a Certificate meeting
the requirements of Treasury Regulation Sections 1.987-2(g) and
1.897-2(h)(2) that the Xxxxx Shares do not constitute a U.S. real property
interest.
6.16 PURCHASE OF JOINT VENTURE INTEREST. The Company will use
its best efforts to negotiate and enter into agreements for the
acquisition by the Surviving Corporation of all interests held by the
Company's joint venture partners in both of (i) Perlco, L.L.C. and (ii)
Salt River Recycling, L.L.C. The agreements shall provide that the
closings will occur as promptly as possible after the Effective Time of
the Merger. Prior to the Closing Date, the Company shall obtain releases
and/or waivers of any restrictive covenants, which would, following the
Merger, bind MTLM, the Surviving Corporation or any of their Affiliates,
other than a covenant not to compete in favor of MetricMetal, L.L.C. and a
covenant not to compete in favor of Xxxxxx Street Trading Company. The
Company shall obtain MTLM's prior written approval of the price, terms and
conditions of any acquisition of such interests and releases or waivers of
any restrictive covenants.
6.17 MEETING OF SHAREHOLDERS. MTLM shall take all actions
necessary, in accordance with General Corporation Law of Delaware, its
Certificate of Incorporation and its By-laws, to duly call, give notice
of, convene and hold a meeting of its shareholders as promptly as
practicable (or have executed a written consent of its shareholders in
lieu thereof), to adopt and approve the Agreement and the Merger
contemplated hereby, any amendments to the Articles of Incorporation or
By-laws of MTLM as required by this Agreement, and the other transactions
contemplated by the Agreement to the extent such approval is required.
6.18 PRE-CLEAR MERGER. MTLM, Mergeco and the Company shall
take all necessary steps to pre-clear the Merger with the Secretary of
State of the State of Illinois, in order that on the Closing Date, the
Articles of Merger may be filed with the Secretary of State of the State
of Illinois and become effective upon filing.
6.19 FINANCING. MTLM will use reasonable efforts to raise at
least $50.0 million of additional financing by offering convertible
debentures, high-yield debt, equity or some combination of the foregoing
(a "FINANCING"). MTLM shall use the funds from such Financing to retire
existing indebtedness, provide for working capital and finance
acquisitions by MTLM. If MTLM has not received a firm commitment for the
placement of such Financing or closed such Financing on or prior to June
30, 1997, the Company shall have the right to terminate this Agreement.
6.20 CONDUCT OF MTLM'S BUSINESS. From and after the Effective
Time of the Merger and for so long as the Stockholders Agreement shall
remain in effect:
(a) the Shareholders, acting as a group, shall have the right
to nominate that number of persons constituting one-half of the total
number of directors of MTLM; provided that one of such nominees shall be
an independent director reasonably acceptable to T. Xxxxxxxx Xxxxxxxx and
Xxxxxx X. Xxxxxx all as further provided in the Stockholders Agreement;
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(b) T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxxx, acting as a
group, shall have the right to nominate that number of persons
constituting one-half of the total number of directors of MTLM; provided
that one of such nominees, shall be an independent director reasonably
acceptable to the Shareholders, all as further provided in the
Stockholders Agreement;
(c) the directors of MTLM shall appoint the following persons
to the offices set forth opposite their names, all as further provided in
the Stockholders Agreement:
(i) Xxxxxx X. Xxxxx: President, Chief Operating Officer
(ii) Xxxxxx X. Xxxxxx: Chief Executive Officer
(iii) T. Xxxxxxxx Xxxxxxxx: Chairman and Chief Development Officer
(iv) Xxxxx X. Xxxxx: Vice President and President of the Surviving
Corporation
(d) the Board of Directors of MTLM will create an Executive
Committee of the Board of Directors, including Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxx and T. Xxxxxxxx Xxxxxxxx, which committee shall be delegated all
the powers and authority of the Board of Directors relating to the
management of the business and affairs of MTLM as permitted under Section
141 (c) (l) of the General Corporation Law of the State of Delaware;
provided, that, in the event of the death or disability of Xxxxxx X.
Xxxxx, Xxxxx X. Xxxxx shall assume Xxxxxx X. Xxxxx'x position on such
Executive Committee; provided, further, that any action to be taken by the
Executive Committee shall require the unanimous consent of Xxxxxx X. Xxxxx
(or in the event of his death or disability, Xxxxx X. Xxxxx), Xxxxxx X.
Xxxxxx and T. Xxxxxxxx Xxxxxxxx; and
(e) Xxxxxx X. Xxxxx shall periodically convene a meeting of
all members of the Office of the President, which members shall consist of
at least one executive officer of each principal subsidiary of MTLM, and
he shall lead discussions regarding the strategic direction of MTLM and
key operating issues affecting MTLM at such time.
6.21 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Closing, the Company and the Shareholders, on one hand, and MTLM and
Mergeco, on the other hand, shall supplement or amend the Schedules hereto
with respect to any matter hereafter arising which, if existing or
occurring at or prior ro the date of this Agreement, would have been
required to be set forth or described in any such Schedule or which is
necessary to complete or correct any information in any such Schedule or
in any representation or warranty of the Company and the Shareholders, on
one hand, or MTLM and Mergeco, on the other hand, which has been rendered
inaccurate thereby. For purposes of determining the satisfaction of the
conditions set forth in Sections 7.1 and 8.1 hereof, no such supplement or
amendment shall be given effect unless expressly agreed so by each of the
parties hereto.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF MTLM AND MERGECO
The obligations of MTLM and Mergeco to effect the Transaction
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole or in
part by MTLM:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of the Shareholders
contained in this Agreement shall be true and correct at and as of the
Closing Date with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain
true and correct as of such date. The Company and the Shareholders shall
have performed and complied with all of their respective obligations
required by this Agreement to be performed or complied with at or prior to
the Closing Date. The Company and the Shareholders shall have delivered
to MTLM a certificate, dated as of the Closing Date, duly signed (in the
case of the Company by its respective chief executive officer and chief
financial officer), stating that such representations and warranties are
true and correct and that all such obligations have been performed and
complied with.
7.2 FINANCING. MTLM shall have received the written consent
of Bank of America, Illinois to the transactions contemplated hereby on
terms and conditions reasonably satisfactory to MTLM.
7.3 CORPORATE CERTIFICATE. The Shareholders shall have
delivered to MTLM (i) copies of the articles of incorporation and bylaws
of the Company as in effect immediately prior to the Closing Date, (ii)
copies of resolutions adopted by the Board of Directors of the Company and
the Shareholders authorizing the transactions contemplated by this
Agreement, and (iii) certificates of good standing of the Company issued
by the State of Illinois and each other state in which each of them is
qualified to do business as of a date not more than thirty days prior to
the Closing Date, certified in each case as of the Closing Date by the
Secretary as being true, correct and complete.
7.4 OPINIONS OF COUNSEL. MTLM shall have received opinions
dated as of the Closing Date from counsels for the Company and the
Shareholders, in form and substance acceptable to MTLM, to the aggregate
effect that:
(i) the Company and each Subsidiary is a
corporation duly organized and existing and in good standing
under the laws of its state of incorporation, and each of them is
authorized to carry on the business now conducted by it and to
own or lease the properties now owned or leased by it;
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(ii) the Company has obtained all necessary
authorizations and consents of its governing board to effect the
transactions contemplated in this Agreement;
(iii) all issued and outstanding shares of
capital stock of the Company and each Subsidiary are owned as set
forth on Schedule 4.5 hereto;
(iv) except as set forth in Schedule 4.12,
counsel has no actual knowledge (without any independent
investigation of any sort) of any litigation, proceeding or
investigation pending or threatened which might result in any
material adverse change in the properties, business or prospects
or in the condition of the Company or the Subsidiaries, or which
questions the validity of this Agreement;
(v) counsel has no actual knowledge (without
any independent investigation of any sort) that any event has
occurred or state of facts exist which would constitute a breach
of any of the representations and warranties made by the
Shareholders pursuant to Article IV of this Agreement; and
(vi) this Agreement is a valid and binding
obligation of the Company and the Shareholders, as the case may
be, and enforceable against each of them in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally and general
equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
7.5 GOVERNMENTAL APPROVALS. All consents, authorizations
and approvals from, and all declarations, filings and registrations with
any governmental authority required to consummate the transactions
contemplated by this Agreement, including those set forth on Schedule 4.6,
shall have been obtained or made without the imposition of any material
conditions, and all applicable waiting periods under the HSR Act shall have
expired or terminated.
7.6 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or
collect damages arising out of the Agreement or any other transaction
contemplated hereby, and which, in the judgment of MTLM, makes it
inadvisable to proceed with the Agreement and other transactions
contemplated hereby.
7.7 MTLM'S APPROVALS. The shareholders of MTLM shall have
authorized and approved this Agreement and the transactions contemplated
hereby.
7.8 FAIRNESS OPINION. MTLM shall have received a fairness
opinion, in form and content acceptable to MTLM in its sole discretion, as
to the fairness of the transactions contemplated
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by this Agreement to MTLM and its shareholders and such opinion shall not
have been withdrawn prior to Closing.
7.9 OTHER CLOSING DELIVERIES. At Closing, MTLM shall have
received:
(a) a current commitment for title insurance insuring title
to the real property owned by the Company and the Subsidiaries as set
forth on Schedule 4.14 (a) which shows no Liens other than current real
estate/general taxes and Liens disclosed on such Schedule 4.14(a);
(b) each Collateral Agreement executed by the Company, the
Shareholders and/or their Affiliates, as the case may be, who is a party
thereto;
(c) resignations effective as of the Closing Date from such
officers and directors of the Company and the Subsidiaries as MTLM shall
have requested in writing;
(d) the stock books, stock ledgers, minute books, and other
books and records of the Company; and
(e) all other previously undelivered agreements,
certificates, documents, instruments or writings required to be delivered
by the Company and/or the Shareholders at or prior to the Closing pursuant
to this Agreement or otherwise in connection herewith, duly executed by
the Company and/or the Shareholders, as the case may be, who is a party
thereto.
7.10 DISSENTING SHAREHOLDERS. No shareholders of the Company
shall have elected to exercise any appraisal rights with respect to the
Merger as provided for under Section 11.65 of the BCA.
7.11 XXXXX BUILDING CORPORATION. The Company shall own all of
the issued and outstanding shares of Xxxxx Building Corporation.
7.12 ESTATE OF XXXXX X. XXXXX. The Company shall have
obtained a general release from the Estate of Xxxxx X. Xxxxx and Xxxxx
Xxxxx releasing the Company, MTLM and their respective affiliates from all
claims, obligations, liabilities, promises, agreements, suits, demands or
debts, other than the amount reflected in the Company's Current Balance
Sheet, that they may have against such entities and persons, in a form and
substance satisfactory to MTLM, in its sole discretion.
7.13 NO MATERIAL ADVERSE CHANGE. Between the date hereof and
the Closing Date, there has been no Material Adverse Change to the
Company.
7.14 METRICMETAL. The Company shall have taken all action
necessary to cause the dissolution of MetricMetal, L.L.C.
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7.15 EAST CHICAGO INDIANA REVENUE BONDS. The Company shall
have received the written consent of G.E. Capital Public Finance, Inc. to
the transactions contemplated hereby under that certain Loan Agreement
dated July 1, 1996 among G.E. Capital Public Finance, Inc., the City of
East Chicago, Indiana, and American Scrap Processing, Inc.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and each of the Shareholders to
effect the Transaction shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by the Company and the Shareholders:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of MTLM and Mergeco
contained in this Agreement shall be true and correct at and as of the
Closing Date with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain
true and correct as of such date. Each of MTLM and Mergeco shall have
performed and complied with all of their obligations required by this
Agreement to be performed or complied with at or prior to the Closing
Date. Each of MTLM and Mergeco shall have delivered to the Shareholders
a certificate, dated as of the Closing Date, and signed by an executive
officer (in the case of MTLM by its respective chairman and chief
financial officer), certifying that such representations and warranties
are true and correct and that all such obligations have been performed and
complied with.
8.2 MERGER CONSIDERATION. At the Closing, MTLM shall have
delivered to the Shareholders the merger consideration provided for in
Section 1.4.
8.3 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or
collect damages arising out of the Agreement or any of the transactions
contemplated hereby, and which in the judgment of the Shareholders makes
it inadvisable to proceed with the Agreement or any other transaction
contemplated hereby.
8.4 OPINION OF COUNSEL. The Shareholders shall have received
an opinion dated as of the Closing Date from counsel for MTLM, in form and
substance acceptable to the Shareholders, to the effect that:
(i) MTLM is a corporation duly organized
and existing and in good standing under the laws of the State of
Delaware and is authorized to carry on
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the business now conducted by it and to own or lease the
properties now owned or leased by it;
(ii) Mergeco is a corporation duly organized
and existing and in good standing under the laws of the State of
Illinois, and is authorized to carry on the business now
conducted by it and to own or lease the properties now owned or
leased by it;
(iii) Each of MTLM and Mergeco has obtained
all necessary authorizations and consents of its Board of
Directors and Shareholders to effect the transactions
contemplated in this Agreement;
(iv) such counsel has no actual knowledge
(without any independent investigation of any sort) of any
litigation, proceeding or investigation pending or threatened
which might result in any material adverse change in the
properties, business or prospects or in the condition of MTLM, or
which questions the validity of this Agreement;
(v) such counsel has no actual knowledge
(without any independent investigation of any sort) that any
event has occurred or state of facts exists which would
constitute a breach of any of the representations and warranties
made by MTLM or Mergeco pursuant to Article II and III of this
Agreement; and
(vi) this Agreement is a valid and binding
obligation of each of MTLM and Mergeco, and enforceable against
it in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether
such enforceability is considered in a proceeding at law or in
equity.
8.5 TAX OPINION. The Shareholders shall have received an
opinion from its counsel to the effect that the merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
8.6 CONSENTS. The Company shall have received the written
consent of Bank of America Illinois to the transactions contemplated
hereby, on the terms and conditions reasonably satisfactory to MTLM,
including, the Company shall not be required to pay any fees or other
costs in exchange for such consent and the Shareholders shall not be
required to personally guaranty any indebtedness owed by the Company to
Bank of America Illinois.
8.7 OTHER CLOSING DELIVERIES. At Closing, the Companies and
the Shareholders shall have received each Collateral Agreement to which
MTLM and/or its Affiliates are a party, duly executed by MTLM and/or its
Affiliates, as the case may be.
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8.8 NO MATERIAL ADVERSE CHANGE. Between the date hereof and
the Closing Date, there has been no Material Adverse Change (as defined in
Section 2.23) to MTLM.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE SHAREHOLDERS TO INDEMNIFY. The
Shareholders agree, jointly and severally, to indemnify, defend and hold
MTLM harmless from and against the aggregate of all Indemnifiable Damages
(as defined below) if and when such Indemnifiable Damages exceed $500,000
in the aggregate, and then only to the extent of such excess.
(a) For purposes of this Agreement, "INDEMNIFIABLE
DAMAGES" means, without duplication, the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses) incurred or
suffered by MTLM, on a pre-tax consolidated basis, to the extent (i)
resulting from any breach of a representation or warranty made by the
Company or the Shareholders in or pursuant to this Agreement, (ii)
resulting from any breach of the covenants or agreements made by the
Company or the Shareholders pursuant to this Agreement, or (iii) resulting
from any inaccuracy in any certificate or environmental report delivered
by the Company or any Shareholders pursuant to this Agreement.
(b) Without limiting the generality of the
foregoing, with respect to the measurement of Indemnifiable Damages, MTLM
shall have the right to be put in the same pre-tax consolidated financial
position as MTLM would have been in had each of the representations and
warranties of the Shareholders hereunder been true and correct and had the
covenants and agreements of the Company and the Shareholders hereunder
been performed in full.
(c) Each of the representations and warranties made
by the Shareholders in this Agreement or pursuant hereto shall survive for
a period of twelve (12) months after the Closing Date except as follows:
(i) the representations and warranties of the Shareholders contained in
Section 4.19 (Tax Matters) and Section 4.18 (ERISA), and to the extent
relating to tax attributes or liabilities with respect to Taxes of the
Company, shall expire at the time the period of limitations (including any
extensions thereof pursuant to the delivery of waivers of the applicable
period of limitations) expires for the assessment by the taxing authority
of additional Taxes with respect to which the representations and
warranties relate; and (ii) the representations and warranties of the
Shareholders contained in Sections 4.1, 4.2, 4.3, 4.4, and 4.5 shall not
expire, but shall continue indefinitely. No claim for the recovery of
Indemnifiable Damages may be asserted by MTLM against the Shareholders
after such representations and warranties shall thus expire, provided,
however, that claims for Indemnifiable Damages first asserted within the
applicable period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by
investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and
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agreements of the other parties contained in this Agreement or in any
other documents or papers delivered in connection herewith. Each
representation, warranty, covenant and agreement of the parties contained
in this Agreement is independent of each other representation, warranty,
covenant and agreement.
(d) In the event that MTLM believes it is entitled
to a claim for any Indemnifiable Damages hereunder, MTLM shall promptly
give written notice to the Shareholders of such claim and the amount or
the estimated amount of such claim, and the basis for such claim. If the
Shareholders do not pay the amount of the claim for Indemnifiable Damages
to MTLM within ten (10) days, then MTLM may exercise its respective rights
under Section 9.4 and/or take any action or exercise any remedy available
to them by appropriate legal proceedings to collect the Indemnifiable
Damages.
9.2 AGREEMENT BY MTLM TO INDEMNIFY. MTLM agrees to
indemnify, defend and hold the Shareholders harmless from and against the
Shareholders Indemnifiable Damages (as defined below) if and when such
Shareholders Indemnifiable Damages exceed $500,000 in the aggregate and
then only to the extent of such excess.
(a) For purposes of this Agreement, "SHAREHOLDERS
INDEMNIFIABLE DAMAGES" means, without duplication, the aggregate of all
expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by the Shareholders, on a pre-tax consolidated basis,
to the extent (i) resulting from any breach of a representation or
warranty made by MTLM or Mergeco in or pursuant to this Agreement, (ii)
resulting from any breach of the covenants or agreements made by MTLM or
Mergeco in or pursuant to this Agreement, or (iii) resulting from any
inaccuracy in any certificate delivered by MTLM or Mergeco pursuant to
this Agreement.
(b) Without limiting the generality of the
foregoing, with respect to the measurement of Shareholders Indemnifiable
Damages, the Shareholders have the right to be put in the same pre-tax
consolidated financial position as he would have been in had each of the
representations and warranties of MTLM hereunder been true and correct and
had the covenants and agreements of MTLM hereunder been performed in full.
(c) Each of the representations and warranties made
by MTLM and Mergeco in this Agreement or pursuant hereto shall survive for
a period of twelve (12) months after the Closing Date, notwithstanding any
investigation at any time made by or on behalf of the Shareholders, and
upon expiration of such twelve (12) month period, such representations and
warranties shall expire, except as follows: (i) the representations and
warranties of MTLM contained in Section 2.17 (Tax Matters) and Section
2.25 (ERISA), and to the extent relating to tax attributes or liabilities
with respect to Taxes of MTLM, shall expire at the time the period of
limitations (including any extensions thereof pursuant to the delivery of
waivers of the applicable period of limitations) expires for the
assessment by the taxing authority of additional Taxes with respect to
which the representation and warranties relate; and (ii) the
representations contained in Sections 2.1, 2.2, 2.3 and 2.6 and Article
III shall survive and continue indefinitely. No claim for the recovery of
Shareholders
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Indemnifiable Damages may be asserted by the Shareholders against MTLM
after such representations and warranties shall thus expire, provided,
however, that claims for Indemnifiable Damages first asserted within the
applicable period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by
investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered
in connection herewith. Each representation, warranty, covenant and
agreement of the parties contained in this Agreement is independent of
each other representation, warranty, covenant and agreement.
(d) In the event that the Shareholders believe they
are entitled to a claim for any Shareholder Indemnifiable Damages
hereunder, the Shareholders shall promptly give written notice to MTLM of
such claim and the amount or the estimated amount of such claim, and the
basis for such claim. If MTLM does not pay the amount of the claim for
Shareholder Indemnifiable Damages to the Shareholders within ten (10)
days, then the Shareholders may take any actions or exercise any remedy
available to them by appropriate legal proceeding to collect the
Shareholder Indemnifiable Damages.
9.3 CONDITIONS OF INDEMNIFICATION. The obligations and
liabilities of the Shareholders and MTLM hereunder with respect to their
respective indemnities pursuant to this Article IX resulting from any
claim or other assertion of liabilities by third parties (hereinafter
called collectively "CLAIMS"), shall be subject to the following terms and
conditions:
(a) the party seeking indemnification (the
"INDEMNIFIED PARTY") must give the other party or parties, as the case may
be (the "INDEMNIFYING PARTY"), notice of any such Claim twenty (20) days
after the Indemnified Party receives notice thereof;
(b) the Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the
defense of such Claim; provided, however, if a Claim is made against MTLM
which exceeds the value of the Escrow Shares at such time, MTLM shall have
the right to control the defense of the Claim;
(c) in the event that the Indemnifying Party shall
elect not to undertake such defense, or within a reasonable time after
notice of any such Claim from the Indemnified Party shall fail to defend,
the Indemnified Party (upon further written notice to the Indemnifying
Party) shall have the right to undertake the defense, compromise or
settlement of such Claim, by counsel or other representatives of its own
choosing, on behalf of and for the account and risk of the Indemnifying
Party (subject to the right of the Indemnifying Party to assume defense of
such Claim at any time prior to settlement, compromise or final
determination thereof);
(d) anything in this Section 9.3 to the contrary
notwithstanding, (A) the Indemnified Party shall have the right, at its
own cost and expense, to have its own counsel to protect its own interests
and participate in the defense, compromise or settlement of the Claim, (B)
the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise
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any Claim or consent to entry of any judgement which does not include as
an unconditional term thereof the giving by the claimant or the plaintiff
to the Indemnified Party, its officers, directors and agents of a release
from all liability in respect of such Claim, and (C) the Indemnified
Party, by counsel or other representatives of its own choosing and at its
sole cost and expense, shall have the right to consult with the
Indemnifying Party and its counsel or other representatives concerning
such Claim, and the Indemnifying Party and the Indemnified Party and their
respective counsel shall cooperate with respect to such Claim.
9.4 SECURITY FOR THE SHAREHOLDERS'S INDEMNIFICATION
OBLIGATION. As security for the agreement by the Shareholders to
indemnify and hold MTLM harmless as described in Section 9.1, MTLM shall
have the right to offset any Indemnifiable Damages against the Escrow
Shares. Notwithstanding anything contained herein to the contrary, the
aggregate Indemnifiable Damages which the Shareholders are obligated to
indemnify and hold harmless MTLM against pursuant to Section 9.1 shall be
limited to the Escrow Shares.
9.5 THE XXXXX X. XXXXX ESTATE SPECIAL INDEMNIFICATION. In
addition to the agreement of the Shareholders set forth in Section 9.1 and
without regard to any limitations thereon contained in Section 9.1 or
Section 9.4, if MTLM waives its condition set forth in Section 7.12, the
Shareholders jointly and severally agree to indemnify, defend and hold
MTLM, the Company and their respective Affiliates harmless from and
against all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and
expenses) incurred or suffered by any of them arising out of or resulting
from (i) any payment required to be made by MTLM or the Company of
Additional Consideration (as that term is defined in the Xxxxx X. Xxxxx
Sales Agreement which is not reflected in the adjustment pursuant to
Section 1.8 hereof, or (ii) any breach or alleged breach by the Company or
MTLM of any agreement, covenant, or obligation in favor of the Estate of
Xxxxx X. Xxxxx, or any beneficiary thereof; provided, however, that the
Shareholders shall have no obligation to indemnify MTLM, the Company or
their Affiliates for any amount reflected on the Company's Current Balance
Sheet. Xxxxxx X. Xxxxx, for and on behalf of MTLM and the Company, shall
have the exclusive power and authority to defend, conduct, control,
compromise and settle all matters, claims and controversies relating to
the Xxxxx X. Xxxxx Sales Agreement, including the power and authority to
cause MTLM and the Company to pay any obligations relating thereto. Any
amounts paid or otherwise validly demanded to be paid by MTLM or the
Company for which MTLM, the Company or their Affiliates are entitled to
indemnification pursuant to this Section 9.5, shall be immediately paid by
the Shareholders to MTLM or the Company as the case may be, upon written
demand therefor, without deduction or setoff.
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ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Closing Date of MTLM Shares:
10.1 DISPOSITION OF MTLM SHARES. Each of the Shareholders
represents and warrants that each of the MTLM Shares being acquired by him
hereunder is being acquired and will be acquired for his own account and
will not be sold or otherwise disposed of, except pursuant to (i) an
exemption from the registration requirements under the Securities Act,
which does not require the filing by MTLM with the SEC of any registration
statement, offering circular or other document, in which case the
Shareholders shall first supply to MTLM an opinion of counsel (which
counsel and opinions shall be satisfactory to MTLM) that such exception is
available, or (ii) an effective registration statement filed by MTLM with
the SEC under the Securities Act.
10.2 LEGEND. Each of MTLM Shares shall bear the following
legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT
THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
MTLM may, unless a registration statement is in effect covering MTLM
Shares, place stop transfer orders with its transfer agents with respect
to such certificates in accordance with federal securities laws.
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"Aboveground Storage Tanks" defined in Section 2.24 (g).
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date hereof.
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"Agreement" defined in the introductory paragraph of
this Agreement.
"Asbestos" or "Asbestos-containing material" defined in
Section 2.24 (i).
"Assets" defined in Section 4.15 (a).
"BCA" defined in Section 1.1.
"CERCLA" defined in Section 2.24 (j).
"Claims" defined in Section 9.3.
"Closing" defined in Section 1.7.
"Closing Date" defined in Section 1.7.
"Code" defined in Section 2.17.
"Common Stock" means the common stock, par value of $.01
per share, of MTLM.
"Collateral Agreements" defined in Section 6.12.
"Company" defined in the introductory paragraph and for
purposes of Section 4.13, more particularly defined in
Section 4.13 (l).
"Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, restriction, will, trust,
commitment, obligation or other contract, agreement or
instrument, whether written or oral.
"Xxxxx" defined in the introductory paragraph of this
Agreement.
"Xxxxx Shares" defined in the Recitals hereto.
"Current Balance Sheet" defined in Section 4.9.
"Designated Contracts" defined in Section 4.25.
"Discharge" defined in Section 2.24 (e).
"Disclosed Contracts" defined in Section 2.14.
"DOJ" defined in Section 6.13.
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"Effective Date" defined in Section 1.2.
"Effective Time" defined in Section 1.2.
"EMCO" means EMCO Recycling Corp.
"Employee Benefit Plans" defined in Section 4.18 (a).
"Environmental Assessment" defined in Section 6.10.
"Environmental, Health and Safety Laws" defined in
Section 2.24 (j).
"EPCRA" defined in Section 2.24 (j).
"ERISA" defined in Section 2.25 (a).
"Escrow Agreement" defined in Section 1.6.
"Escrow Agent" defined in Section 1.6.
"Escrow Shares" defined in Section 1.6.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"FIFRA" defined in Section 2.24 (j).
"FTC" defined in Section 6.13.
"Financial Statements" defined in Section 4.9.
"Financing" defined in Section 6.19.
"Fixed Assets" defined in Section 4.15 (b).
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government,
any state, regional, local or other political subdivision
thereof, and any entity or official exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Hazardous Substances" defined in Section 2.24 (d).
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"XXX Xxx" defined in Section 2.7.
"HouTex" means HouTex Metals Company, Inc.
"Immigration Act" defined in Section 2.12(c).
"Indemnifiable Damages" defined in Section 9.1 (a).
"Indemnified Party" defined in Section 9.3 (a).
"Indemnifying Party" defined in Section 9.3 (a).
"Insurance Policies" defined in Section 4.20.
"Intellectual Property" defined in Section 4.24.
"In the ordinary course of business" as used in reference
to MTLM's business, is defined in Section 2.9.
"Xxxxx X. Xxxxx Sales Agreement" defined in Section 1.8.
"Leased Premises" defined in Section 4.14 (b) and for
purposes of Section 4.13, more particularly defined in
Section 4.13 (m).
"Leases" defined in Section 4.14 (b).
"Licenses" defined in Section 2.24 (b).
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not
limited to, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in
connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business or
prospects which change (or effect) individually or in the
aggregate, is materially adverse to such condition, properties,
assets, liabilities, rights, obligations, operations, business or
prospects.
"Material Customers" defined in Section 4.26.
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"XxxXxxx" means XxxXxxx Metals Company.
"Mergeco" defined in the introductory paragraph of this
Agreement.
"Merger" defined in the Recitals.
"MPPA Plan" defined in Section 2.25(b).
"MTLM" defined in the introductory paragraph of this
Agreement and for purposes of Section 2.24, more particularly defined in
Section 2.24 (m).
"MTLM Assets" defined in Section 2.15.
"MTLM Current Balance Sheet" defined in Section 2.9.
"MTLM Financial Statements" defined in Section 2.9.
"MTLM Fixed Assets" defined in Section 2.15.
"MTLM Insurance Policy" defined in Section 2.26.
"MTLM Leased Premises" defined in Section 2.27 and for
purposes of Section 2.24, more particularly defined in Section 2.24(n).
"MTLM Owned Properties" defined in Section 2.27 and for
purposes of Section 2.24, more particularly defined in Section 2.24(n).
"MTLM Receivables" defined in Section 2.18.
"MTLM Shares" defined in the Recitals.
"MTLM Subsidiary" defined in Section 2.1.
"OSHA" defined in Section 2.24(j).
"Owned Properties" defined in Section 4.14(a) and for
purposes of Section 4.13, more particularly defined in Section
4.13(m).
"Permits" defined in Section 2.13.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust,
unincorporated association, joint venture, limited liability
company, Governmental Authority or other entity, of whatever
nature.
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"PBGC" defined in Section 4.18 (f).
"RCRA" defined in Section 2.24(j).
"Receivables" defined in Section 4.21.
"Release" defined in Section 2.24(e).
"Reserve" means Reserve Iron & Metals L.P.
"Restricted Territory" defined in Section 6.9(a).
"SEC" means the Securities and Exchange Commission.
"SEC Filings" means the documents listed on Schedule
11.1.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shareholders" defined in the introductory paragraph of
this Agreement
"Stockholders Agreement" defined in Section 6.12 (b).
"Shareholders Indemnifiable Damages" defined in Section
9.2 (a).
"Subsidiary" is defined in Section 4.1.
"Surviving Corporation" defined in Section 1.1.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect
to any Taxes; and
"Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security and
unemployment taxes imposed by any federal, state, local or
foreign governmental agency, and any interest or penalties
related thereto.
"Termination Date" defined in Section 6.9.
"Underground Storage Tanks" defined in Section 2.24 (g).
"Waste" defined in Section 2.24 (d).
"Welfare Plan" defined in Section 2.25 (c).
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11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have
the defined meanings when used in any certificates, reports or other
documents made or delivered pursuant hereto or thereto, unless the context
otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in
connection with this Agreement and the transactions contemplated hereby
shall be determined in accordance with GAAP applied on a basis consistent
with prior periods, where applicable.
(d) As used herein, the neuter gender shall also
denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
(e) As used herein, the term "to the best knowledge
of MTLM" or any similar term relating to the knowledge of MTLM means the
actual knowledge, after reasonably inquiry, of any of the officers of MTLM
or the MTLM Subsidiaries. "Reasonable inquiry" shall mean communication
by any of the officers of MTLM or the MTLM Subsidiaries with the other
officers of MTLM or the relevant MTLM Subsidiary with responsibility for
the matter in question and to counsel with respect to matters involving
questions or law, requesting such individual to review specified
provisions of this Agreement and to advise such person of any matter
relevant to the specified representation, warranty or provision.
(f) As used herein, the term "to the best of the
Shareholders' knowledge" or any similar term relating to the knowledge of
the Shareholders means the actual knowledge, after reasonable inquiry, of
any of the officers of the Company and the Subsidiaries. "Reasonable
inquiry" shall mean communication by any of the officers of the Company or
the Subsidiaries with the other officers of the Company or relevant
Subsidiary with responsibility for the matter in question and to counsel
with respect to matters involving questions or law, requesting such
individual to review specified provisions of this Agreement and to advise
such person of any matter relevant to the specified representation,
warranty or provision.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated:
(a) at any time prior to the Closing Date, by mutual
written consent of all of the parties hereto at any time prior to the
Closing;
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(b) at any time prior to the Closing Date, by MTLM
in the event of a material breach by the Company or the Shareholders of
any provision of this Agreement;
(c) at any time prior to the Closing Date, by the
Shareholders in the event of a material breach by MTLM or Mergeco of any
provision of this Agreement;
(d) at any time prior to the Closing Date, by MTLM
in the event (i) MTLM is not satisfied, in its sole discretion, with the
results of the Environmental Assessment; (ii) MTLM does not receive
authorization and approval of this Agreement and the transactions
contemplated hereby by its shareholders at the meeting referred to in
Section 6.17; (iii) MTLM has not received from its investment advisor a
written opinion satisfactory to MTLM in its sole discretion, that this
Agreement and the transactions set forth herein are fair to MTLM and its
shareholders;
(e) at any time prior to the Closing Date, by the
Shareholders if the Shareholders have not received from their tax counsel
an opinion to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code;
(f) at any time prior to the Closing Date, by any of
MTLM or the Shareholders if the Closing shall not have occurred by
September 30, 1997; provided, however, that neither MTLM, nor the
Shareholders shall be entitled to terminate this Agreement pursuant to
this Section 12.1(f), if such party's knowing or willful breach of this
Agreement has prevented the consummation of the transactions contemplated
hereby; or
(g) by the Company, as provided in Section 6.19.
12.2 EFFECT OF TERMINATION. Except as provided in Article VI,
in the event of termination of this Agreement pursuant to Section 12.1,
this Agreement shall forthwith become void; provided, however, that
nothing herein shall relieve any party from liability for the willful
breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered
by certified or registered mail (first class postage prepaid), guaranteed
overnight delivery, or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which
such party shall designate in writing to the other party):
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(a) IF TO MTLM TO:
Metal Management, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy No.: (000) 000-0000
WITH A COPY TO:
Xxxxxxx & Xxxxxxxx Ltd.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
(b) IF TO THE COMPANY OR THE SHAREHOLDERS TO:
Xxxxxx X. Xxxxx
Xxxxx Iron & Metal, Inc.
0000 Xxxxx Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
WITH A COPY TO:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: M. Xxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at the
Closing pursuant hereto, contains the entire understanding of the parties
in respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect
to such subject matter; provided, however, that, notwithstanding the
foregoing, the provisions of that certain Exchange of Information and
Nondisclosure Agreement dated as of October 23, 1996 by and between MTLM
and the Company shall remain in full force and effect. The Exhibits and
Schedules constitute a part hereof as though set forth in full above.
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13.3 EXPENSES. Except as otherwise provided herein, MTLM,
Mergeco and the Company shall pay their own fees and expenses, including
their own counsel fees, incurred in connection with this Agreement or any
transaction contemplated hereby; provided, however, the Company shall not
pay any fees and expenses relating to the Shareholders' estate planning
activities.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written
instrument executed by all parties. No failure to exercise, and no delay
in exercising, any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude the exercise of any other
right, power or privilege. No waiver of any breach of any provision shall
be deemed to be a waiver of any preceding or succeeding breach of the same
or any other provision, nor shall any waiver be implied from any course of
dealing between the parties. No extension of time for performance of any
obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other
obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at
law or equity, that they may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations
of this Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns. Nothing expressed or implied
herein shall be construed to give any other person any legal or equitable
rights hereunder. Except as expressly provided herein, the rights and
obligations of this Agreement may not be assigned by any of the
Shareholders without the prior written consent of MTLM.
13.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of
which together shall constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this
Agreement to an article, section, paragraph, clause, schedule or exhibit,
such reference shall be deemed to be to this Agreement unless otherwise
indicated. The headings contained herein and on the schedules are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or the schedules. Whenever the words
"include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Time
shall be of the essence in this Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of
the State of Illinois applicable to contracts executed and to be wholly
performed within such State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before
executing this Agreement, said party has fully informed itself of the
terms, contents, conditions and effects of this Agreement; (b) said party
has relied solely and completely upon its own judgment in executing this
Agreement; (c) said party has had the opportunity to seek and has obtained
the advice of counsel before executing this Agreement; (d) said party has
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acted voluntarily and of its own free will in executing this Agreement;
(e) said party is not acting under duress, whether economic or physical,
in executing this Agreement; and (f) this Agreement is the result of arm's
length negotiations conducted by and among the parties and their
respective counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first above
written.
METAL MANAGEMENT, INC., A
DELAWARE CORPORATION
Date:______________________ By:_____________________________
Name:___________________________
Title:__________________________
CIM ACQUISITION, CO.,
AN ILLINOIS CORPORATION
Date:______________________ By:_____________________________
Name:___________________________
Title:__________________________
XXXXX IRON & METAL, INC.,
AN ILLINOIS CORPORATION
Date:______________________ By:_____________________________
Name:___________________________
Title:__________________________
Date:______________________ ___________________________________
XXXXXX X. XXXXX
Date:______________________ ___________________________________
XXXXX X. XXXXX
Date:______________________ ___________________________________
XXXXXXX X. XXXXX
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